President Obama announced a $75 billion program Wednesday aimed at stabilizing the housing market and keeping millions of borrowers in their homes.
But, as Obama said, "This plan will not save every home." So who does qualify for the assistance? What exactly will they get — and when will they get it?
What if I'm a homeowner on the brink of foreclosure?
Homeowners who are behind on their mortgage payments may qualify for a mortgage modification.
To qualify, the house must be your primary residence, your mortgage payment must be greater than 31 percent of your monthly gross income and your loan mustn't exceed current Fannie Mae and Freddie Mac loan limits, which max out at $729,750.
What if I'm not near foreclosure? Do I get any help?
Borrowers who are current on their mortgages but can't refinance into lower interest-rate loans because their homes have fallen in value are eligible to refinance into a 30- or 15-year, fixed-rate loan under the plan, but only if their loan is held by mortgage finance companies Fannie Mae or Freddie Mac.
To qualify, homeowners can't owe more than 105 percent of their home's current value on their first mortgage. For example, if your home is worth $100,000, your first mortgage can't exceed $105,000.
Who qualifies for the refinancing program?
It is only open to homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac. Call your lender or the company that collects your mortgage payments, known as a servicer, and find out if your loan is owned or guaranteed by those agencies.
Lenders will not begin taking applications until next month. In the meantime, collect your financial information including recent pay stubs, recent tax returns and information about other debts, like credit cards, student loans and car loans.
What kind of a refinanced loan could I receive?
Borrowers can refinance into a 30- or 15-year fixed rate loan based on current market rates. According to Freddie Mac's weekly survey, the average interest rate for a 30-year fixed rate mortgage last week was 5.16 percent and 4.81 percent for a 15-year fixed rate loan.
Okay, but what about me? I am in trouble on my mortgage.
Under Obama's program, lenders are encouraged to lower homeowners' payments to 31 percent of their income. That could come from lowering the interest rate to as low as 2 percent or extending the terms of the loan.
Lenders could also lower the principal owed by the borrower or stop charging interest on a portion of the loan, known as principal forbearance.
Are there any extra perks for homeowners?
Yes. Under the Obama plan, homeowners that stay current on their mortgage after the modification will be eligible for an incentive payment of up to $1,000 a year from the government for five years. The bonus would be applied to the borrower's mortgage to lower the principal.
Can I apply for the modification program for investment properties?
What else does this program require of me?
The program takes special aim at homeowners with a lot of debt, including credit card and car loans. If your total debt consumes 55 percent or more of your income, the program requires you to enter a government-certified debt counseling program.
Any breaks for first-time home buyers?
That was taken care of in the $789 billion economic stimulus plan that Obama signed Tuesday. First-time home buyers who purchase a home between Jan. 1 and Dec. 1 will be eligible for a tax credit of 10 percent of the value of the home, up to $8,000.
Homeowners don't have to pay back this credit over the next 15 years, the way they had to with the $7,500 tax credit enacted last summer. However, home buyers would have to repay the credit if they sold their homes within three years.
First-time buyers are defined as those who haven't owned a house for at least three years.
How soon can I expect to take advantage of these benefits or aid?
The refinancing and loan modification programs start March 4. The first-time home buyer tax credit is in effect from the first of the year through the end of November.
What if I'm facing foreclosure now and can't wait until March 4?
Contact your mortgage servicer or mortgage lender. Many lenders said they will postpone foreclosure sales on homes that could qualify for the modification.
How much will the Obama plan cost taxpayers?
The administration estimates the total cost at $75 billion. About $50 billion would come from financial-rescue funds already approved by Congress, and it would be used to subsidize loan modifications.
The administration estimates that the refinancing program will cost Fannie Mae and Freddie Mac about $25 billion. Those funds are already in the budgets of the mortgage giants, which were taken over by the government in the summer.
Information from the Associated Press Los Angeles Times and Washington Post was used in this report.