Stimulus Package Mortgage Assistance

Stimulus package mortgage assistance is available for homeowners and first time buyers through federal programs introduced in 2009. Tax credits, renegotiated mortgage rates and terms as well as special refinancing programs are available to provide homeowners with solutions to the problems associated with mortgages.

Avoid the squeeze with help from a stimulus package.

Several mortgage assistance programs were including in the stimulus packages enacted by Congress in 2009. The programs were designed to help new and current homeowners get into and stay in the housing market. Specifically, the programs include:

• American Recovery and Reinvestment Act of 2009 – This program is designed to help first time home buyers who are having trouble finding the funds for a down payment on a new home.
• Making Home Affordable – This program is part is part of the mortgage bailout stimulus program and is designed to help current homeowners who are having trouble paying their current mortgage payment due the mortgage interest rate or a reduction in their income.

Both programs have very specific qualification requirements to make sure that the individuals receiving the assistance are credit-worthy and consequently will be able to maintain their new mortgage payments.

The stimulus mortgage assistance is designed to bring credit-worthy first time homeowners or current homeowners together with lenders and loan servicers. The goal is to create new mortgage opportunities for borrowers and lenders which borrowers can afford. This will help create a stronger mortgage market. Borrowers are required to show that they have the financial ability to make their new mortgage payments in full and on time.

The American Recovery and Reinvestment Act of 2009 provides a tax credit to first time home buyers. The new homebuyer can receive a credit of up to 10 percent of the purchase price, up to a maximum of $8,000. This credit helps the homebuyer to gather the funds for their down payment and purchase a home during 2009.

To qualify, a borrower must meet a series of qualifications including:

• The borrower cannot have owned a primary residence in the last two years
• The borrower cannot earn more than $75,000 if single or $150,000 if a married couple
• The home must be purchased between January 1, 2009 and December 1, 2009

The borrower receives the tax credit when they file their tax return. If the tax credit exceeds the borrower's tax liability, they will receive a tax refund for the difference.

Part of the Making Home Affordable program is a mortgage modification program designed to help homeowners renegotiate the terms of their current mortgage loan and lower their monthly mortgage payment. This program is specifically designed for homeowners who are trying to stay current on their mortgage payment but who are finding that they may be facing future default on their payments because of a decrease in their income or an increase in their expenses.

There are very specific requirements in place in the program to qualify for mortgage renegotiation. These requirements include:

• The home must be the homeowner's primary residence.
• The mortgage cannot exceed $729,750.
• The homeowner must be willing to show their recent tax returns and income sources.
• The homeowner must be willing to work with a debt counselor if requested by the lender.

If a homeowner qualifies, their lender may be willing to modify their current mortgage so that the monthly mortgage payment does not exceed 31 percent of the homeowner's monthly income. To achieve a lower monthly mortgage payment, the lender may reduce the interest rate, extend the term of the loan or include a combination of both in the new mortgage terms. The modification program also includes interest rate caps and financial incentives for homeowners and lenders.

The Making Home Affordable program also includes programs to help homeowners refinance their high rate mortgage loans even if the value of their property has dropped, leaving them with limited equity in their property.

To qualify for mortgage refinancing help, the homeowner must meet three primary requirements:

• The homeowner cannot be in default on their current mortgage.
• The homeowner cannot owe more than 105 percent of the current value of the property.
• The homeowner must be able to show their financial ability to make the mortgage payments on their refinanced mortgage.

Additionally, the mortgage loan must also meet specific requirements including:

• The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
• The loan can be on a primary or second residence or on investment property.
• The loan can be either a fixed or adjustable rate loan.

The key to obtaining stimulus package mortgage assistance is for the first time home buyers or homeowner to move quickly and get information to determine if they might qualify for the benefits and to help them evaluate their options. All of these programs are available for a limited time. Additionally, the mortgage modification programs are designed to help homeowners before they default on their loan. Information is available from non-profit counseling agencies, lenders and loan servicers.

The Department of Housing and Urban Development provides information on the stimulus package programs to non-profit counseling agencies throughout the United States. Counselors at these agencies are trained to evaluate which, if any, of the programs might be helpful for a particular home buyer or homeowner. There is no cost for this evaluation.

Homeowners who are at risk of not making their future mortgage payments should contact their lender or loan servicer immediately to see if they quality for this program. If they wait until they miss a payment they may not qualify for the programs and may face foreclosure; lenders may be unwilling to renegotiate the mortgage at that time.

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