President Obama currently has a government new refinancing program to help with homeowner affordability and stability. This plan is in addition to other finance bills passed by congress in 2008 and 2009. These refinancing programs have stipulations put in place to make it easier for homeowners who owe more on their home than their home is worth.
This loan should only be used by people who are far behind on their payments. If you are keeping up with your payments this is not the plan for you. People with good credit will get their credit hurt instead of getting better credit.
Lenders with these government-backed loans are able to provide refinancing options to homeowners, but it comes with a price. Government plans can hurt your credit by quite a bit. This is why it is important to only take advantage of this type of loan when you are struggling with the current plunge in the housing market.
However, this program comes with a cost. Your credit score will take a plunge anywhere from 100 to 150 points on average. This is why it is important to only take advantage of it is you are under severe financial difficulties.
Many people are surprised to learn that the government program hurts credit scores. While the government understand the repercussions, they normally do not share this information unless asked about it first. Information regarding any changes in your score is not something they will freely give out.
Before you make the decision to use the government program know what your credit score is. Investigate and get a credit report before you make the choice to use the program. If you find that your credit score is still high you may not want to take such a big hit in your score by refinancing your loan through the government.
If you have good or decent credit, instead of taking advantage of the government-backed loan do refinancing on your own. Take advantage of a regular refinancing loan. A regular loan won’t lower your score as drastically as a government-assisted one would.
When you get your credit report be sure to check its accuracy. If you notice anything that does not belong there be sure to contact the credit bureau for corrections. If you notice a problem with your credit it is best to leave it to the professionals to correct it. Credit repair companies are the most legitimate way to dispute misleading credit information, as well as help you repair bad credit.
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