In the recent years the number of home owner who have succumbed to foreclosure has increased by around 150 %.? This most alarming situation has occurred as a result of the ill effects of recession. Though economists and the administrators of the country claim that the recession had withered away, people living in this country are suffering from it?s by products like foreclosure. Tens of thousands of people are compelled to leave their houses and live in shelters or streets. The plight of such homeless people had urged the Government to take necessary steps to put an end to the ever-increasing number of foreclosure victims.
75 billion dollars were allotted to control this ugly situation and to provide help to those who are facing foreclosure threat. This amount was intended to encourage the financiers to refinance the debt trapped mortgages, so that they will be given financed afresh, clearing all the arrears of the earlier mortgage dues. This re-financed mortgage will be having a more practical period of re-payment so that the monthly dues to be paid become bearable by the borrower. The government has fixed some criteria which have to be satisfied for making a home owner eligible for the benefits of this refinance scheme. The most important requirements of these eligibility criteria and the benefit of mortgage refinance scheme are explained here.
1. The first criteria stipulates that an applicant will be eligible for the benefits of this scheme only if his mortgage payments for a month does not exceed 31 % if his monthly income. In other words if a person has a monthly income of $ 10, 000, then he will be eligible for the benefits of this scheme, only If his mortgage payments for a month does not exceed $ 3, 100.
2. An important advantage of this scheme is that it allows the lender to reduce the interest rate by 2 %. As the period of repayment extends to more than 20 years, this provision helps the monthly re-payment amount to be reduced to a considerable extend which will be very helpful to the borrower.
3. Another provision of this scheme allows persons with medical bills or other debts to avail the benefit of mortgage refinance scheme. People who are having medical bills and other debts usually find it very difficult to pay the mortgage dues. As such people have been specifically included in the purview of this scheme it will be very helpful to them.
4. Another important provision of this scheme allows the home owners to apply afresh, even if their earlier application as per the previous scheme had already been rejected.
5. Another provision of this scheme clearly stipulates that no service charge or any other fee shall be levied from persons who are applying for the benefits of this scheme. Usually banks and other financial institutions charge heavily for whatever service they provide. But as there is specific provision, banks cannot charge any extra amount for granting refinance and this is a great benefit to the distressed home owners.
Photo by TheTruthAbout
Source: http://www.foreclosuredataonline.com/blog/mortgage/the-mortgage-refinance-scheme/
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