Mar
06

New Plans to Help Struggling Homeowners

March 06, 2012

It is now going to be easier for millions of U.S. and Chicago real estate owners to save money each month on their mortgages.

President Barack Obama announced new plans on Tuesday aimed at helping struggling homeowners survive the distressed housing market.

Under the plan, the U.S. government is going to cut fees on federally insured mortgages to help more homeowners take advantage of record-low mortgage rates.

“While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference,” said the White House in a statement.

The fee reduction means that borrowers with mortgages insured by the Federal Housing Administration will be able to refinance at a portion of the fee that the FHA usually charges. According to Obama and his administration, the average refinancing FHA borrower can now save more than $1,000 a year under the new plan.

Here’s how they explain it:

• Consider a typical FHA borrower with $175,000 outstanding on their mortgage. Currently, if this borrower refinanced into a 4% loan, they could reduce their monthly payments to nearly $1,010 a month, including both the upfront and monthly mortgage insurance premiums.

• With lower mortgage insurance premiums, this borrower could reduce their total monthly payments to about $915 per month. That means nearly $100 in additional savings per month for an FHA borrower – on top of the savings they would receive from refinancing to a lower interest rate.

The government estimates that 2 to 3 million homeowners could benefit from the program, which applies to loans taken out before June 1, 2009.

The plan is a go, as it does not need congressional support to be enacted.

President Obama also laid out extensive plans to help members of the military, veterans and their families, including those who may have wrongfully lost their homes to foreclosure or been denied a lower interest rate. The plan would aid service members in keeping their homes and even calls for reimbursement for overcharges and damages.

To find out all the details of that plan, visit whitehouse.gov.

Categories: Economy, Featured, Mortgages

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Tracey

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