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Obama's Stimulus Package and Home Refinancing - What Homeowners Should Know

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President Obama is set to help 9 million homeowners by announcing a new $75 billion Stimulus Package to help those who have been stuck hardest by the severe economic downturn. The recession has put homeowners and lenders at great risk and with this Stimulus Package both parties will receive aid. Obama hopes that this Stimulus Package will allow consumers to start spending again, thus adding much-needed stimulus to the economy.

Under the Plan, homeowners can be eligible for mortgage refinancing or loan modification.

Mortgage refinancing was only open to homeowners who had more than 20% equity in their homes. With the economic downturn, housing prices have been greatly affected making make homeowners illegible for refinancing. Under the Stimulus Package, this minimum equity was eliminated. You can qualify for refinancing if your Freddie Mac or Fannie Mae loan is 105% more than your home? current market value. Another condition is that this home must be your primary residence.

Loan modifications are renegotiations to lower your monthly mortgage payment. This is done through changing the terms of the loan including: interest rate, extension of the mortgage years and altering repayment options. The Plan gives the lenders a $1,000 incentive to successfully renegotiate loans. If your debts do not exceed 55% of your gross income and the home is your primary residence, you can qualify for loan modifications. Your new monthly payment cannot exceed 31% of your gross monthly income. Furthermore, there no be no fees for late payments. The best option is to speak with your lender to determine what the best options for you are. Ultimately, you want to work towards financial freedom.

The Stimulus package is a great opportunity for many homeowners. Doing your own research on the options available to you can significantly alter your financial future.

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