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By: Carol Parker

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A Lower Mortgage Interest Rate with the Debt Consolidation Loans Financial Stability Plan
Take advantage of the Obama administration's Making Homes Affordable Plan with a no money down refinance to save money on mortgage interest and pay down principal.
Recently interest rates have reached historic lows. The combination of the Federal Reserve keeping rates low alongside other economic conditions has allowed mortgage banks to lend money at very attractive levels. However, because of the downturn in the real estate market, there are many people who have faithfully paid their mortgages on time, but are suddenly finding themselves underwater.
This means that they owe more than the home is worth. In this situation, normally banks will not refinance the loan as they do not want to lend a borrower more money for an asset that is worth less. Enter the Financial Stability Plan which was introduced under the Obama administration.
The Financial Stability Plan was created to help stabilize an otherwise shaky real estate market. One aspect of the plan allows people to refinance their home, thus making lower monthly mortgage payments which will hopefully allow them to save more money on a month to month basis. This additional money can be applied to the principal of the mortgage (to pay down the overall debt) or can go toward other family needs such as paying off credit card debt, college loans or simply saving for the future.
The Home Owner Must be Current on Mortgage Payments.
There has been much talk about the many programs that encourage borrowers to miss several months of mortgage payments because of hardship and then apply for a loan modification. While the modification can bring a family relief in some instances, there are no guarantees that the modification will be accepted by the bank. Also, an individual's credit will take a severe hit as they rack up missed or late payments.
To qualify for the refinancing program under the Financial Stability Plan the homeowner must be current on their mortgage. They also must continue to make payments as scheduled as they go through the refinancing process.
Other Stipulations for to Refinance under the Financial Stability Plan
There are a few other criteria that are required in order to refinance the loan under the financial stability plan.
The value of the first mortgage cannot exceed 125% of the value of the first mortgage.
The loan should be a Fannie Mae or Freddie Mac loan.
The home must be considered a 1 to 4 unit property. This means that a condo or housing situation with more than 5 units cannot be refinanced under this plan.
It is imperative to make sure that one is meeting all of these requirements before applying for the refinance program.
Subordinate Loans
One thing to watch out for is any junior loans that are tied to the first mortgages. Many of these loans have conditions associated with them that may preclude the refinancing aspect. Such loans are usually obtained through state or city programs that were in place to help homeowners purchase their first home or in a high cost area. Check with the local city or state government if there is a junior loan on the deed from one of these sources.
Refinancing Can Be Positive for Overall Financial Health
The idea to refinance comes down to a math equation for most people. If they can pay less interest and pay down the principal amount of loan down faster (provided they have the income to do it) it will allow them greater financial freedom down the road as the real estate market comes back throughout the country. This is because they will have a higher percentage of equity then they would have had if they had stayed in their original loan.

Article Source: http://depositarticles.com/

For money-saving tips on Debt Consolidation Loans read more here about Home Loan Mortgage Broker.

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