The financial chaos of recent years has lefts its mark on millions of homeowners across the country. With so many people finding themselves evicted from their homes, and repossessions at a high level, it doesn’t come as a surprise that the government stepped in to help. After all, it’s in everyone’s interests to keep people in their homes – the family stays where they are happiest, the financial institutions continue to get their mortgage payments, and the government doesn’t have to help the evicted.
The Obama administration has implemented the Making Home Affordable refinance program in order to tackle these problems. This is part of a larger effort to strengthen the economy, but for the average homeowner it has more immediate implications. There are various situations where you may be able to benefit from the Making Home Affordable refinance program, so let’s take a look at some of them.
Lowering Mortgage Payments
With so much disruption in the job market, many people have found themselves unemployed or underemployed. If you find yourself in a position where you are struggling for whatever reason to make your mortgage payments, the Make Home Affordable refinance program has a variety of possible solutions:
- The Home Affordable Modification Program (HAMP) is available to people facing financial hardship. By adjusting mortgage payments, it is possible for such people and families to remain in their homes and for their financial burdens to be reduced.
- Loans which are insured or guaranteed by the Federal Housing Administration, the USDA’s Special Loan Service, or the Department of Veteran’s Affairs, you may also be eligible for assistance through those agencies.
Home Value Changes
One of the biggest problems people with mortgages currently face is dramatic shifts in the value of their mortgaged property. As a result many people have found themselves with mortgage payments that no longer reflect the actual value of their homes Fortunately this has been recognized as an area of difficulty, and there are numerous potential options if you’re in such a situation:
- The Home Affordable Refinance Program (HARP) is designed to help you if you’re able to make mortgage payments, but you can’t secure refinancing because your property’s value has dropped.
- If your home is now worth significantly less than you owe, the Principle Reduction Alternative (PRA) may be the best place to start.
- The Hardest Hit Fund is available to residents of certain states worst hit by the economic crisis. This is a total of $7.6 billion, designed to help homeowners in various situations, including principle reduction and help eliminating second lien loans.
Even if your situation is such that the above programs can’t help, don’t despair! The Home Affordable Foreclosure Alternatives (HAFA) was designed specifically for you. The idea is to provide alternatives to foreclosure, through two principle mechanisms:
- HAFA short sales differ from conventional ones, in that you are not held eligible for the difference between the sale price and the amount you owe, as you would be with a typical short sale.
- A Deed-in-Lieu (DIL) of foreclosure allows you to transfer the deed (and therefore ownership) back to the mortgage company.
- A possible payment of $3000 for relocation assistance.
These aren’t pleasant eventualities, it’s true, but if you find yourself in such a position, it’s much better to be proactive and take advantage of the Making Home Affordable refinance program. You may be able to adjust your payments so you can still make them, or if you do have to move out, HAFA will help make that as painless as possible, with a lessened impact on your credit rating.