Loan Modification Program Making Home Affordable

Last week President Obama's administration began implementing a $75 billion loan modification program and homeowner refinance program to help as many as 9 million homeowners avoid foreclosure. The plan uses money from the $700 billion approved last year as part of the TARP I funds that were originally used to bailout banks and get credit flowing.

This new plan, dubbed Making Home Affordable, uses incentives to encourage lenders and loan servicers to modify loans. The lenders and servicers can do this either by lowering interest rates or by dropping the principal amount of the loan. J.P. Morgan's Jamie Dimon said that the bank would not reduce principal payments; they would only lower interest rates for 5-years and after 5-years, the loans interest rates would reset to current levels (around 5%).

The Making Home Affordable plan has two main components. The Home Affordable Refinance portion of the plan offers current homeowners that are not behind on their mortgage payment breathing room by allowing the homeowners to refinance their home into lower interest rate loans, this is done by allowing them to refinance to as much as 105% of the home's current value.

The Home Affordable Modification portion of the plan offers assistance to struggling homeowners that are behind on payments and in danger of losing their home to foreclosure. This portion of the plan modifies a current mortgage so that a homeowner's monthly payment is no more than 31% of their monthly gross income.

If you're a homeowner that would be interested in refinancing their home into lower interest rates, or a homeowner that is struggling to meet financial commitments and needs a loan modification, visit the new government website Financialstability.gov.

This plan is a portion of the larger TARP II plan that may include a "bad bank" that will buy up troubled assets from banks; it's a plan that could cost as much as $2 trillion, but at the same time, TARP II may stabilize our financial and housing markets. Do you think the plan will help curb foreclosures and get our economy back on its feet?

New Homes Section is a leader in providing housing information that matters. Learn more about the loan modification program by visiting our blog. On our blog, you'll find quick links to frequently asked questions and information about the new $8000 new home tax credit for new home buyers

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How Does the Reverse Mortgage Process Work?

A reverse mortgage can be a useful tool for many current home owners. It can give you money when you need it most in your later years of life. If you have been searching for a way to supplement your retirement or gain money for a much needed expense, then this may be the ideal solution for you. The information below will provide you with a comprehensive overview of the process and will help to give you an idea of whether it will work for you.

Who Qualifies for a Reverse Mortgage?
To qualify for this type of mortgage program, you need to meet only two criteria, and you will not be subjected to credit approval, income verification or any of the other cumbersome activities of a traditional mortgage. You must be at least 62 years old and have a considerable amount of equity in your home in order to qualify for this program. If you do not meet these two criteria then it is not for you.

How Does it Work?
Unlike a traditional mortgage a reverse one pays you instead of you making payments to the bank. The amount you receive will vary according to the amount of equity that you have in your home. You can choose to receive your payment in four various ways, through a lump sum, in monthly payments, as a line of credit, or any variation of the above methods. You will have a closing just as you did with a traditional mortgage, and some closing costs will be required on your part.

Will They Take Your Home?
No, the bank will never take your home in a reverse mortgage without first giving you or your family the options of buying it back. You are not required to make any payments on the loan associated with a reverse mortgage until you die or no longer occupy the home. At this time, you or your surviving family can sell your home and keep what is left over after paying off the loan. If there is no equity left in the home or a negative amount is owed to the bank, then they take the loss and the profits from the home's sale. However, once you move or pass on, your family can choose to pay off the loan and keep the home if they choose.

A reverse home mortgage can be an invaluable supplement for those with a low pension or only social security payments during retirement. You can get a lump sum for an emergency, or just enjoy doing what you have always wanted to in your golden years. Review all of the information above, and you should have a better idea of whether this type of program would work for you.

Learn whether a reverse mortgage, or another resource is right for you at http://www.reversemortgageprogram.info

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