Friday, March 20, 2009

Making Home Affordable Again

The United states foreclosure problem sure is a mess right now. There are some towns in Florida and California where 1 in every 60 homes are being foreclosed upon. If that doesn't yell "foreclosure crisis" nothing will. So I thought I'd make this blog post about some of the things a homeowner can do to hopefully be able to afford those Mortgage payments.

#1 Go to the New Government Site
The government, and President Obama have announced this new site which is presented to help United States homeowners afford their mortgage payments. It will teach you everything you need to know in order to Make Your Home affordable. From teaching you how refinancing and restructuring of loans work, to providing you the data of the cheapest rates, resources to tell if you as a home owner are eligible for a restructuring of your loan through Fannie Mae or Freddie Mac.

#2 Consider refinancing your Mortgage:
Two days ago the Federal reserve announced that they will be buying billions of dollars in US Treasuries. What does this mean for you as a struggling homeowner? It means that the inetrest rates will continue to plummet. Some experts speculate that the Federal Reserve is trying to reduce the average mortgage rate to as low as 4%. That would be as low as it has ever been sicne we have been keeping record. This means if you are in a mortgage which is at a much higher rate, 5, 6, 7, 8, 9% you can refinance and reduce your monthly payments considerably. For every 1% the interest rate goes down on your mortgage, you will be paying $100 per month less per $100,000 loan amount. If you have a loan for $300,000 at a 7% inetrest rate, and refinance to 4%, you would probably save about $900 per month in payments. That is BIG!

#3 Don't over extend yourself
The most obvious, yet most overlooked rule is to live within your means. If you have any question about affording a new home, and the mortgage payments that go with it. Don't buy!

Remember to check out the the Making Home Affordable site in the link above. Also discuss this and all other financial issues at the Personal Finance Forum.

1 comment:

imee said...

I really think people should be smarter regarding their finances. If this recession and thousands of foreclosures aren't enough to teach people this hard lesson, I don't know what will.


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