Mortgage Assistance

Recession has left everyone scrambling for ways on how to deal with the troubling finances. More employees are losing their jobs today as more companies are now opting to cut the workforce to save on operation costs. This scenario has affected the housing industry in some way.

Since more people are now losing their jobs, their ability to keep up with their mortgage payment considerably weakens. As a result, more people are receiving foreclosure notices. Selling their property is not an option since their debt is a lot higher compared to the current value of their property.

Regular refinancing is also not an option. Most companies that offer refinancing will never work with property owners whose debt is higher than the actual value of the property. In fact companies are still expecting equity from the property before they actually allow any transaction. For that reason, getting assistance through refinancing is virtually impossible.

Government Help

But help is on the way; just recently the government has approved the stimulus package worth more than $700 billion. This package aims to deal with the current challenges of recession and help the country rise up again. From road projects to various grants, government assistance will be available to those who qualify for them.

To be more specific, the federal government’s assistance for the real estate industry will be more than $75 billion. Their estimate is that this amount will benefit at least 9 million property owners and even lenders.

This assistance has a twofold direct effect – this amount of funds will assist those that are facing foreclosure and the fund will be used to reward those who extend assistance to those who are in need of financial help. Lending institutions are highly encouraged to offer assistance since grants will be available.

The government assistance will greatly help those who are seeking refinancing. As already indicated, regular refinancing is very difficult today because of the required equity. But the government assistance will accommodate even those whose debt to property value is higher by 5%.

What is more, payment is a lot easier since aside from the lower interest rate, the early payment penalty for the government is also accepted without any penalties. Regular refinancing companies will charge you if you pay them in advance.

Further Qualifications

Although the assistance would be for those who are having trouble with refinancing. Not everyone could be part of the program. The following are further qualifications on how to be eligible for government assisted refinancing:

• Excess debt - The excess of debt to the current property value should be no more than 5%. Anything more than that would be too risky for the government.

• No jumbo mortgage – The property should not be too expensive. Although the threshold of being “too expensive” is not yet laid out as of this writing (the outline will be available on March 4) estimates would place the threshold in $400,000. Even if you still have equity, you will still be denied.

• Good payment record – This is not necessarily on good credit score. Your payment records will be greatly scrutinized to ensure that you will not have any trouble in paying back what you owe to the government.

• Source of income – Part of the good payment record requirement, those who can qualify in refinancing should have a job that could pay for the new refinancing assistance. However, the source of income and required annual earnings is not yet outlined.

If you think you will qualify for this type of assistance, contact your current lending institution for this option. The government should lay out further details in the 4th of March.