The ‘Making Home Affordable’ plan rolled out this week. It’s all a part of the new home plans put in place by the Obama administration. It’s designed to allow struggling homeowners who are “underwater” on their loans to refinance at a more affordable rate.

There are a few key points:

• Not every mortgage is eligible for refinance — you have to check first
• You can be up to 5% underwater on your home and still qualify
• If you don’t pay PMI today, you won’t pay PMI post-refinance

This plan doesn’t penalize applicants for depressed home values, which many homeowners are facing.

To learn more about this plan, you’ll want to visit MakingHomeAffordable.gov. There are a couple of assessments you can go through to find out if you might be eligible for the plan. (Not everyone is eligible!)

There are two parts to the plan. The refinancing plan is for mortgages guaranteed by Fannie Mae or Freddie Mac and for homeowners whose current mortgage debt is equal to or less than the current value of their home.

Home Affordable Refinancing

There is a series of questions to help you determine your eligibility for the refinancing plan. If your answer is ‘yes’ to these questions, you may be eligible.

• Are you the owner of a one- to four-unit home?
• Do you have a loan owned or guaranteed by Fannie Mae or Freddie Mac?
• Are you current on your mortgage payments?
• “Current” means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months.
• Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?

Home Affordable Modification

There is also the Home Affordable Modification. This plan is geared toward people whose mortgage payments are more than 31% of their income and who can no longer make mortgage payments. A ‘yes’ to all these questions could mean eligibility for the program.

• Is your home your primary residence?
• Is the amount you owe on your first mortgage equal to or less than $729,750?
• Are you having trouble paying your mortgage?
• For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)?
• Did you get your current mortgage before January 1, 2009?
• Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) more than 31% of your current gross income?

Before you see a professional about these plans, there is a list of information you’ll want to have handy:

• Information about your first mortgage, such as your monthly mortgage statement.
• Information about any second mortgage or home equity line of credit on the house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all your other debts such as student loans and car loans.
• Your most recent income tax return.
• Information about your savings and other assets
• Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.
• It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable.

Mortgage planner Dan Green sent me great info from his website link to pass on to you. You’ll find a lot of helpful information here.
For more information check out the MakingHomeAffordable website, which is very comprehensive. Here’s a little info to get you started:

• Video about the program
• Modification calculator
• Frequently Asked Questions (pdf)
• Homeowner Examples

Related...

• January 24, 2009 -- New Stimulus Plan: Will it help housing?
• December 20, 2008 -- A Time to Refinance??