Guest Author - Rose Mary
Do you qualify for the housing bailout? With all of the current news surrounding the real estate market and foreclosures, the latest housing bailout has hit the presses. Who will be helped and who will not? Continue reading to learn about the latest information on the upcoming housing bailout and if you are eligible.
-You may be eligible if you are currently in a position that you may fall behind in your mortgage. Things such as an adjustable rate is going to reset to a higher level or you have lost your job. If your mortgage is over 31% of your gross monthly income and is not a jumbo loan, you may qualify for a loan modification. Jumbo loans and second homes are not included in this bailout.
-If you are not in danger of losing your home, you may still be eligible to refinance your mortgage at lower rates.
-Remember, second mortgages are not eligible. In the case of the second mortgage, you still may be able to refinance provided both mortgages combined do not exceed 105% of the homes value. In addition, the second lien holder would be required to subordinate to the new refinanced first mortgage lien holder. In other words, they would have to remain in second position.
-Only primary residences are eligible. Second homes and investment properties are not.
-Not all lenders are required to participate in this event but the government has set several incentives to entice them.
-The loan amount will not be reduced for this modification. There is an incentive to receive a reduction of principal in the amount of $1,000 in principal per year for 5 years if the homeowner stays current with payments on the loan modification.
-If the property is worth less than the current mortgage, homeowners may be able to refinance a Fannie Mae or Freddie Mac conforming loan. The mortgage payment must be current and the amount owed cannot exceed 105% of the current home value. This will eliminate a lot of people in very hard hit areas of the county.
When the final plan is put into action, any homeowner who may be eligible should contact their current lender to see if they are participating and also to find out whether they currently have a conforming Fannie Mae or Freddie Mac loan.
There is a lot of controversy surrounding this housing bailout because many people feel it is unfair. It will not help those with jumbo loans or those who have lost a lot of equity in their homes due to the falling prices.
Home ownership is now facing a reality that many people who purchased during the boom never thought about. Purchasing a home is an investment just like purchasing shares in a corporation. It is not a savings account or an ATM machine. Just like shares, it is a gamble where there are no guarantees. Just like shareholders in for the long term, each day is different. The market goes up and the market goes down. You gain and you lose. Long term investors do not watch these gains and losses everyday. They are in for the long haul. Anyone who owns a home for the long term should not be looking at what the current value of the home is worth but should concentrate more on paying it off as soon as possible.