Since details of President Obama’s housing plan won’t roll out until March 4, we thought we’d review what we know so far about qualifying for a refinance loan under Obama’s plan. To qualify, you must:
- Owe between 80-105% of your mortgage. An analysis of Zillow Q4 Real Estate Market Reports shows that 26% of mortgage holders, or 14.8 million homeowners, currently qualify to refinance under these specifications. One quarter (24.6%) of homeowners with mortgages (14 million) do not qualify because they are underwater and owe more than 105% of their home’s value. This is especially true in hard-hit areas of California or Florida, where home values have fallen 40% or more since the peak.
- Have your loan backed by Fannie Mae or Freddie Mac. Approximately 60% of single-family loans are backed by Fannie or Freddie, but a homeowner may not know this about their own loan. If you don’t know, call your lender and ask.
- Have a conforming loan. That means a loan under $417,000 in many areas — or up to $625,500 in high-cost areas like San Francisco, Boston or Washington, DC. Even still, the Zillow Home Value Index (median home value) for the city of San Francisco is $724,244, which says that lots of people have loans higher than the conforming limit. (Note: the conforming loan limit for certain high-cost areas of the U.S. for 2009 mortgage originations is now $729,500.)
We also consulted with Phoenix loan officer Justin McHood who is a key contributor on Mortgages Unzipped to help provide some guidance for anyone wondering what to do until details are revealed. His advice:
- Get all of your paperwork together. Gather in a folder a copy of your driver’s license, copy of your Social Security card, two of your most recent pay stubs, your most recent mortgage statement, the past two years of your W2s, and past two months of bank statements from all accounts.
- Fill out a loan request. Go to Zillow Mortgage Marketplace and fill out a free, anonymous loan request.
- Be patient. Until March 4, lenders won’t know the exact guidelines for an “Obama refinance” — only that one is coming. Once details are announced, expect lenders to take a week or two to implement the guidelines. For example, will an appraisal be required? Will there be different interest rates charged by the lenders for the “Obama refinance?”
- Stay informed. Keep updated on the news so that once details of the plan are released on March 4, you will know whether or not you can qualify.
Justin says critical details as to whether you qualify or not depends on how you determine what your house is worth. Also, what is the method for calculating your exact payment to be 31% of your debt-to-income ratio? What counts and what doesn’t count in this ratio?
It’s obviously pretty complex, but get your paperwork ready, start to shop for lenders (read their reviews and ratings on Zillow Mortgage Marketplace), stay on top of the news and come back here on March 4 to learn the details.
Or, be notified by e-mail. Just go to Account Settings (you may need to sign in) and select the checkbox next to “Buyers, sellers, homeowners” (example above). You’ll be one of the first to know about the Obama refinance details.
See what others are saying
- Go to Zillow Advice’s Economic Watch and the mortgage advice sections and join the conversation.
Do you qualify for a Making Home Affordable Refinance?
Take this quiz: “Do You Qualify for a Refinance Under the Making Home Affordable plan?” to see if you qualify for a refinance. Or, if you have a Web site or blog, add the widget to your site. It’s free and fun content for your visitors — plus, you get free co-branding!
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- Categories: Loan Modification, Refinance
Comments
26 Comments so far
RyanB
Of course, you can’t enter in a refinance request for more than the value of your home… your LTV can’t be >= 100%. You need to update the form to allow such requests.
Dagmara Hill
Hi I am a little bit concerned with this plan. I purchased my home in 2007 for 258K$ with nothing down, and the payments are 2094$ a month, I recently not only was reduced to part time work but also have gotten divorce. Do I look like I qualify for this plan ? I do not want to lose it and I have put in an enormous amount of work into it so I do not want to let it go.
Thank you for any comments
ErinM
I asked for a modification loan from AIG for my house I bought for 214 because I still owe 165. They told me I could buy it for 132 over 40 years. I found out it was appraised at 68. It doesn’t seem right somehow.
Michelle
This plan is worthless. Nobody has 30% mortgage debt to income anymore, and 105% is too low, and only fannie freddie leaves off the key part of the problem. Obama gets an F on this. They were supposed to let everybody in good standing refi. thats what Barrons and other financial editors were calling for.
Abdel
My loan is backed by Bank of New York not Fannie Mae or Freddie Mac.
I didnt know this is important till I read your article and asked my lender - will this be a show stopper to refinance my mortgage?
Thanks for your help
Debi
We’ve been trying to refinance. We are owned by Freddie Mac. We are over 31% of our income, no matter how you figure it
. However, we have been told there is no way to figure out a value for our home, since there are no “comparables”. It is a townhouse, purchased in 2005 for $249,000. We currently owe a first of 192,000 and second of 46,900; total of roughly 240,000. No other townhouses in our community have sold in the past 24 months. What do we do? Do we qualify?
DAVE
I have been trying to refinance since my devorce, and they say I don’t qualify I am self employed and don’t make enough , Is there anyone who can help me. plus I am stuck with Citi Financial as a loan holder paying over 8 % interrest. Do I qualify?? The pay off amount is 104,000. Please help so my Ex does not bring this to court, I have been here by myself for 3 years and I am paying it myself, but they can’t take her name off it with out a refinance and she wants to buy a house now and with her name still on my loan she can’t get one. So she is making my life a living hell. Please Help.
Chokyi - refinance loan
Thanks for sharing your insights on the qualifications for applying Obama mortgage refinance loan. Your review is surely helpful.
Teena
What is the difference in the modification vs the refinance? We have an ARM and just need a lower interest rate and believe we need a modification. Our business ruined our credit and our payment just keeps going up from $900 to $1750 and due to go up this year! My husband took a job and is taking a paycut this year to keep his job. Hoping the Mar 4 guidelines will help us. Any advice?
Do you qualify for Obama refinance plan? | San Francisco Peninsula Real Estate
[...] Diane Tuman of Zillow gives good detailed information on what the plan is expected to be. [...]
Mortgage Relief in Piedmont Oakland San Francisco & The Bay Area |
[...] Arn Cendella, Coldwell Banker/Menlo Park provides a useful guide writen by Diane Tuman at Zillow. [...]
Julie Joyce
Great info…linked to my blog…www.HomesAcrossTheBridge.com
Andy
Thanks for the info and prep tips. Will be interesting to see what further criteria are in the final details
Mary Miller
@RyanB: Thanks for pointing that out. We have fixed the issue, so now borrowers can submit Loan Requests on Zillow Mortgage Marketplace even if they have an LTV of more than 100%.
Richard
I have been talking to a mortage broker to refinance my house, but have waiting for the rates to drop. Will this plan help me get a better rate or help with closing cost? Or does this just help homeowners get approved?
Noe Esparza
Hello, My question is the following. I currently owe 310,000 on my mortgage. My home is valued at approximatly 278,000. My current interest rate is 6.25. Do you think i qualif under the obama or any other institutions plan to refinance my mortgage at the low rate its currently at. My credit is excellent and have a clean history (credit). I feel that the responible people are getting screwed as far as really helping the people that deserve it.
Here’s to looking out for the little guy! « I’m Mad As Hell and Can’t Take it Anymore!
[...] states 40 % can refinance, but according to real estate market reports only 26% of Americans qualify based on the current criteria. Where does Obama get his [...]
Tryanother Plan
Well, I hope President Obama is reading this blog. The plan isn’t working. People who can afford to refinance are not being allowed to refinance. Why, as stated by levy122 we no longer have enough value to our home to qualify. Why, because the underwriters and appraisers have written the rules so that our home value has gone from 570k to 425k to 308k in the span of 6 weeks time. Therefore, the industry will not lend us the money to refinance, and that is with credit scores of 790 and 820. On the bright side, the lending institutions can keep all that stimulus money, and claim they couldn’t share it, because no one could qualify - now there’s a PLAN.
Jerri L. Hunt
This loan started out as a 5-year fixed. I have an interest only loan. My interest rate is 6.4%. I was informed at that time an interest only loan is what I needed, in order to receive more on the refinance.
The loan changes to adjustable rate in 2011. At that point I won’t be able to pay said loan. It may be possible for me to owe more than my home is worth.
Presently, I 0we on my loan 234,800.My note is 1271.04 per mo.
JACOB ADAMS
i HAVE BEEN READING SOME OF YOUR CONCERNS IN REGARDS TO THESE PROGRAMS. YES, I ULTIMATELY AGREE THAT THE STIMULUS PACKAGE IS NOT ENOUGH BECAUSE I AM A HOMEOWNER FIRST AND A LOAN MODIFICATION OFFICER SECONDLY. THERE IS HELP HOWEVER LIMITED IT MAY BE. FOR SOME REASON I HAVE NOTICED THAT LENDERS ARE NOT WILLING TO REALLY WORK WITH HOMEOWNERS AS MUCH AS THEY SHOULD. THEY ARE OFFERING MODIFICATION PROGRAMS THAT ARE SUITED TO THE HOMEOWNERS NEEDS BUT ARE MORE SUITED TO THEIR OWN.
Niel
My mortage servicer is Talyor Bean and Witaker and my mortage investor is Freddie mac. When I call my lender regarding the obama refinancing program, they keep saying that they have not received guidelines for the program and asked to check back in two weeks. I have called atleast 4 times to them.This is really frustrating.
To be eligible for the program, your first mortgage should be less 105% of house value(second mortgage is not considered in LTV), good credit,no missing payments, 1-4 unit house. If you are not paying PMI now, you will not have to pay PMI again on new mortgage. These are straightforward guidelines.
But I DON’T understand why they keep saying they didn’t get guidelines.
Melanie St.James
QUICK ONE:
Do we need to qualify for all THREE of these criteria, or just one? i.e. Fannie Mae, Conforming, AND/OR up to 105%???
THANK YOU!
Kevin Benner
If you do not have a loan backed by Fannie or Freddie it seems bank are very reluctant to do anything. We tried to modify a loan with Wells Fargo and all they would do is lock in a rate for 12 months. Seems to me they are just trying to push the problem down the road in hopes that the market will recover.
Carl
Can you qualify with bad credit?
William
On May 10th 2009 my wife went home to be with the lord. Our income insist on SSI payments. Now my income has cut into half and it takes my whole check just to pay my mortgage payment. I have no extra to pay my heating, lights, or anything else I may need for my home. I am in a big strugel and I can’t find anyone to help me because of the type of home I own, my income and my credit score. I have never been late on my house payment but if something doesn’t happen soon, I will lose the home me and my wife worked so hard for. Please I am begging someone for some help. Where are people in time of need??
Marie
Very very few people qualify for this plan. It’s basically smoke and mirrors for Obama to say he is helping the homeowners.