A few days ago, President Obama announced that he plans to heal the wounding American economy by pushing the Congress to pass the Home Affordable Refinance Program. The bill will help ‘responsible’ homeowners refinance their mortgages at a much lower rate and will amount to a $3,000/year in savings for borrowers who are current with their payments. The people who will benefit from this the most are those who have been very diligent with their payments and maintain a clean credit record. According to the President, “That $3,000 can be used to raise equity in that person’s home, which would raise home values. Alternatively that’s $3,000 in their pocket … That would strengthen the economy as well.”
Highlights of the Bill
- It will help qualifying borrowers save hundreds of dollars a month.
- It will restrict loans to borrowers refinancing their primary residence.
- Borrowers who are not backed by the government, Fannie Mae, or Freddie Mac will be eligible for the plan.
- It will streamline the mortgage process for qualifying borrowers.
- The plan will pay your closing costs on the loan, if you refinance into a loan with a term no longer than 20 years.
Are you a responsible borrower? You can be, if:
- You are current on your mortgage payments for the past six months, with only one late payment in the past 12 months.
- You have a minimum credit score of 580, which is much lower than what is required for a conventional loan.