Simply put, that plan is not for you. And by you I mean middle class Internet readers. The $787 billion plan is for folks who are in dire need of a safety net. They've lost their job, health care insurance and home. The $787 billion plan offers monetary help to the most vulnerable.
But today President Obama announced a new plan which applies to middle class, home-owning America. Today's $75 billion plan is intended to prevent home owners from sliding into foreclosure.
The plan has 3 components:
1) Get your home refinanced. If you are making payments on a home that is worth less than the value of the home, and the load is owned or guaranteed by Fannie Mae or Freddie Mac, you can get it refinanced.
Example: 30-year fixed rate mortgage of $207,000 with an2) Stay in your home, stay out of foreclosure. The plan helps people who are at risk of foreclosure by providing incentives to lenders to alter the terms of loans to make them substantially more affordable to struggling homeowners.
interest rate of 6.50% on a house worth $260,000 at the time. Today, $200,000 is remaining on the mortgage. But the value of that home has
fallen 15 percent to $221,000. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300.
Example: Household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400.3) Stabilize the residential mortgage market. $200 billion of additional financial backing was announced for Fannie Mae and Freddie Mac so that they remain solvent.
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