Obama's Plan Would Ease Mortgage Refinance Restrictions

President Barack Obama followed through on a proposal he originally announced during his State of the Union address last week, as he unveiled the details of his plan to help jump-start the housing market.

The plan, which the president announced February 1, would make mortgage refinance available to more homeowners. One reason families have not been able refinance is because of tighter lender restrictions on who is eligible to receive financing.

He called for refinancing options to be extended to those who have a credit score of at least 580 and have regularly made their mortgage payments on time, in addition to those whose mortgages are not backed by Fannie Mae or Freddie Mac. His proposal also calls for the government to pay the closing costs associated with closing costs.

"I'll be honest - it didn't work at the scale we'd hoped," Obama said, referring to the previous efforts of his administration to address ongoing housing problems. "Mortgage rates are as low as they've been in half a century, and when that happens, homeowners usually flock to refinance their mortgages. But this time, too many families haven't been able to take advantage of the low rates."

Just this week, interest rates continued to plunge to new record lows, as average rates on 30-year fixed-rate loans sunk to 3.87 percent. Under Obama's proposal, homeowners may be able to reap considerable financial benefits if they are able to refinance under these rates. Refinancing will allow homeowners to rebuild equity in their homes while gaining short-term relief.

Homeowners who don't know how to refinance and those who do not meet standard lending requirements should contact a mortgage lender that is willing to take on high-risk borrowers.

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