New Home Loan Refinancing Plan...In The Works?

President Obama has come out with his new home loan refinancing plan regarding homeowners and the ability to refinance their homes without a certain % of equity.  Now before you get all excited about this new plan, remember it still has to pass the senate and the house and it needs to be funded, so there are a couple of ifs to say the least.  Here are a couple of highlights:

1.  Cost will be between $5 and $10 billion; funded is projected to come in the form of a fee to the large banks.
2.  Program will help borrowers with private, non-government bank loans
3.  Must be current on your mortgage payments in the last 6 months and no more than 1 late payment during the preceding 6 months
4.  Have a credit score of 580 or higher
5.  Mortgage balance also cannot exceed the loan limits for FHA-insured loans
6.  Must own and occupy the home covered by the loan

If you qualify, this could really help out your budget.  Remember, we are targeting our mortgage payment to be less than 28% of our gross income.  This will help that out.  Imagine how much you could save if you dropped your interest rate from 6% to ~4%.  I am sure there is good savings there that you could use to help pay off your debts, save for retirement, kids college, a nice vacation, or maybe a little something for yourself.

This sounds like a great program...if it passes.  You need to remember that to fund it, it is proposed to charge the large banks.  If the banks have to pay an additional fee, then it is likely that those banks will pass that fee onto you and I as the consumer.  If this were to pass, watch out for those fees because if you are not careful, they can add up.  This is certain but I just want to give you the heads up.  A link to the article is below.  I found the article on CNN.com/money.  Please read the article as it will help educate you more regarding this proposal.

http://money.cnn.com/2012/02/01/real_estate/Obama_refinancing_plan/index.htm?iid=H_PF_News