“Yes We Can!” It seems we are able to say that to more and more people these days who are seeking a mortgage, thanks (in many cases) to President Obama! I can’t say with confidence that the bailout measures are guaranteed to work, however, things are looking up. Certainly you’ve heard the news reports about housing appearing to be stabilizing, the job losses are slowing, and consumer confidence is beginning to glimmer back to life.
Late last year the government announced a plan to allow homeowners to refinance up to 105% of the value of their home in order to reduce their payments and in many cases move to a “more stable product” for their mortgage loan. This was intended to provide people whose homes had lost value the opportunity to refinance. This of course was a surprise to mortgage lenders and it took several months for lenders to begin to refinance loans using this program. Even now, it’s not a widely used program with many lenders even tightening their requirements as they figure it out.
Last week on the 1st of July, President Obama announced a revision to the plan saying that homeowners could now refinance up to 125% of their homes value. This means that if someone’s home is worth $100,000 they are able to refinance their existing mortgage and roll in closing costs with a new loan not to exceed $125,000. So, while this is another unprecedented measure, it’s said that desperate times call for desperate measures.
Florida was one of the hardest hit states in the housing collapse. We have talked to many people who would love to refinance but find they can’t because they owe well in excess of 105% (the old limit) of the value of their home. Now those people may have another chance to refinance. While this new limit of 125% of the value is approved by the government, it’s likely to take a while for lenders to bite off on this, because of its unfamiliarity and associated, albeit government insured, risk.
If you think you may be a candidate for this newly revised program, please give our office a call and we’ll talk about it.
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