6th Mar, 2009

Making Homes Affordable in Denver and USA

Yesterday the Obama Administration unveiled the Making Homes Affordable Program, which will be helpful for many owners of properties in the Denver area.  It is designed to assist nine million American families to refinance or modify their home loans so that house payments fit into their monthly budgets, including those struggling with loans for Denver real estate.

Beginning with the Refinancing Initiative, we will discuss two initiatives that may directly affect owners of Denver Colorado real estate.  The refinancing initiative is designed to assist responsible homeowners who:

  1. Own and currently occupy a one-to-four-unit home in Denver or elsewhere
  2. Have a mortgage that is owned or controlled by Fannie Mae or Freddie Mac
  3. Are current on mortgage payments (See Modification Initiative below if payments are delinquent.)
  4. Owe the same or slightly less than the current value of the real estate (The first mortgage must not exceed 105 percent of the current market value of the property.  Borrowers with more than one mortgage may also be eligible.) 
  5. Have a stable income that will support the new mortgage payments

Refinancing may not lower payments.  However, all of the loans being refinanced under the plan will have a 30- or 15-year term with a fixed interest rate.  Consequently, homeowners may be able to avoid future mortgage payment increases and reduce the amount of interest paid over the life of the loan, thus saving quite a bit of money over time.  No extra costs, such as the cost of an appraisal, may be included in the refinanced amount. 

Now a few words about the Modification Initiative:  This program begins with a trial modification at a new interest rate and payment.  If everything works out, after 3 months a permanent modification will agreement lower the interest rate to a fixed rate for five years.  In year six, the rate increases gradually until it reaches a rate cap that is determined by the market interest rate on the date that the modification is finalized.

To apply for a Home Affordable Modification, homeowners must own and occupy a one- to four-unit home, have taken out the loan before January 1, 2009, and have unpaid principal that is equal to or less than $729,750 (for one unit properties).  The mortgage payment, including taxes, insurance and association dues, must be more than 31 percent of the gross monthly income.  Because of extenuating circumstances, these homeowners must no longer be able to afford the mortgage payments. 

We advise all interested homeowners to seek the advice of their lenders or talk to Lori Richardson of Cherry Creek Mortgage to ferret out the options available in the Stimulus Package.  As usual, homeowners must be prepared to provide recent pay stubs, income tax return, any information pertaining to a second mortgage, account balances and minimum monthly credit card payments, account balances and monthly payments on other debt.

For more information about real estate in the greater metro area, including farms and horse properties, call Michael Paul of Realty Oasis at (303) 268-6052.

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