President announces home refinancing plan

FRESNO, California

"This is huge. This is probably the best thing that has happened since interest rates have been coming down."

Mortgage Broker Paul Salazar says he has plenty of potential clients who have been trying to refinance their home mortgages, but were stonewalled by the fact they owed more than the properties are worth.

"Most of those people had interest rates around 6 or 7 or even 8 percent and now with this program they can actually lower their rates to what they are today, in the 4 and a half, 4 and a quarter type interest rates."

It sounds like a good deal to Richard Barbosa. Like nearly half of all Fresno homeowners, his house in Harland Ranch is worth less than he owes on it. He'd like to lower his interest rate.

"I'm not looking to draw money out, or do anything just refinance for a lower monthly that would be great I could retire."

For example, on a $200 thousand dollar loan a two per cent drop in interest rates, say from 6% to 4% would save about $250 a month in payments. A 3% drop would save almost $400 a month. A 4% drop, more than $500 a month.

Former homeowner Kristin Walters says she wishes a plan like this would have come sooner.

"Actually ourselves, having to short sale our home is was to leave and that had been an option that might have helped us at that moment in time so I'm glad that is going to be out there to help homeowners."

Critics say it won't help those already heading for foreclosure, but Salazar believes it will still provide needed relief.

"It is actually helping people who are doing the right thing, They are upside down in their home value, they owe more than the house is worth and they've been still making their payment."

Richard Barbosa agrees: "It sounds like its going to make it easier for people like myself."

This goes beyond the current government refinance program which only allows limited refinancing for upside down properties. But, there are catches. It's for homeowners who have made their mortgage payments on time for at least six months, and their loan must be backed by the government agencies, Fannie Mae, or Freddie Mac. That covers a majority of home mortgages, but not all loans. The costs of refinancing and other additional details are expected to be released in the coming days. The program is expected to start making loans by December first. It does not reduce loan amounts, only the interest on the loans.

Copyright © 2021 KFSN-TV. All Rights Reserved.