The new plan, enacted just last month, makes millions of homeowners eligible for a 2% refinance or modification. Some things that were typically needed to be eligible to refinance, such as a 20% equity stake in your home, are no longer required as mortgage lenders and banks strive to follow Obama’s guidelines and approve as many homeowners as possible. This government backed plan will restore consumer confidence in the housing market, prevent millions of foreclosures, and to help struggling homeowners.
Before you commit to anything, it is crucial that you know your options and spend some time thinking about this important decision. You’re likely to pay outrageous fees and the interest you’ll pay on the loan will be two to three times the average rate. That’s because each month you pay your mortgage, more money is sent to the bank to pay interest than to actually owning your home. You’re simply paying a fee.
Let’s start with your general government supplemental support, basic home grants. The Making Home Affordable plan is part of the $75 billion FHA mortgage loan bailout package which was approved by Congress. Which in essence is still not bad deal when you are talking about free government money that you will never have to pay back. Applying for first time homebuyer grants is the quickest and easiest way to get the funds you may need to help you get out of that apartment, into a home, and investing your monthly payments into paying off your own mortgage, instead of your landlord’s.
Although, you would wish to have enough much money that you can buy the house by paying cash, it is nothing more than wild imagination. This is a better option than renting an apartment because there are associated income tax deductions. However, if you have taken a mortgage, then the amount of interest you pay gets deducted from the amount of income tax you pay. This amount may be a significant percentage of the salary you receive, thus leaving you with less disposable income.
