The Obama mortgage option comes with many questions, but one of the most popular is, “Will the Obama Mortgage lower my monthly payments?” While the answer depends greatly on your specific circumstances, you can decide if this homeowner relief program is for you by answering a few simple questions about your loan.
News, updates, and explanations to keep you informed.
Does the Obama Mortgage Lower My Payments?
The Obama Mortgage, officially called the Making Home Affordable program, offers hope for homeowners who want to avoid default, foreclosure, or even simply late payments on their existing mortgages. The Making Home Affordable program or Obama mortgage may be the homeowner relief you need to keep your payments and credit rating on track.
The Obama mortgage option comes with many questions, but one of the most popular is, “Will the Obama Mortgage lower my monthly payments?” While the answer depends greatly on your specific circumstances, you can decide if this homeowner relief program is for you by answering a few simple questions about your loan. Is the current mortgage rate higher than the current market rate? What kind of mortgage rate do you have, fixed or adjustable? What is the current interest rate?
For borrowers who hold variable rate loans, getting into a fixed-rate Obama mortgage can result in lower monthly mortgage payments--if the fixed rate is lower than your variable rate. When considering an Obama mortgage, it’s important to compare the current rates to both the rate you’re paying now AND the rate you’ll pay when the variable rate increases.
Are you making interest-only mortgage payments? You may not see immediate reductions in your mortgage payments, but if you refinance into a fixed lower interest rate (or one comparable to what you currently pay) you will save money over the long term. Any time you can avoid an increase in interest, you wind up saving money over the lifetime of the loan.
Another thing many mortgage holders ask about Obama mortgages, “Will this mortgage rescue program lower the amount of money I owe home loan?” The answer is no--the Obama mortgage is not designed to reduce the loan’s principal amount. It only reduces the interest rate.
Those with not currently in default or foreclosure may wonder why they should apply for this kind of homeowner relief. An important feature of the Obama mortgage (also known as the Making Home Affordable plan) is the ability to get a loan with a better interest rate. Those who have lost value in their homes due to the bad housing market who can’t otherwise qualify for refinancing because of that lost value will find an Obama mortgage to be an important opportunity. Making Home Affordable gives homeowners a chance to take advantage of lower interest rates even though the value of the home has decreased.
The Obama mortgage is also designed to give borrowers better access to stable interest rates, one reason why those holding variable rate mortgages should apply. Homeowner relief comes in a variety of ways through the Making Home Affordable program. Just because you aren’t facing default or foreclosure doesn’t mean you aren’t entitled to fill out an application. If you currently have an FHA or VA loan, you should know legislation is pending designed to offer you the same types of homeowner relief Fannie Mae and Freddie Mac borrowers are getting from the Obama mortgage.