The Federal Reserve recently announced that interest rates have reached 5%, the highest they’ve been in over a decade. This increase in interest rates could have a significant impact on borrowers, as it could mean higher monthly payments for those with adjustable-rate mortgages or other loans with variable interest rates.
The good news is that there are several options available to help borrowers who may be struggling to make their payments. For example, the Home Affordable Refinance Program (HARP) allows homeowners with mortgages owned or guaranteed by Fannie Mae or Freddie Mac to refinance their mortgage even if they owe more than their home is worth. This program can help borrowers lower their monthly payments and save money over the long term.
In addition, the Home Affordable Modification Program (HAMP) provides assistance to homeowners who are struggling to make their mortgage payments due to a financial hardship. This program allows borrowers to modify their loan terms, such as reducing the interest rate or extending the loan term, in order to make their payments more affordable.
Finally, the Federal Housing Administration (FHA) offers a variety of loan programs that can help borrowers with limited incomes or credit histories obtain financing. These loans often have lower down payment requirements and more flexible credit requirements than conventional loans, making them a great option for those who may not qualify for a traditional loan.
The recent increase in interest rates is certainly cause for concern for many borrowers, but there are options available to help those who may be struggling to make their payments. By taking advantage of programs like HARP, HAMP, and FHA loans, borrowers can find relief from high monthly payments and save money over the long term.