For FHA borrowers in variable rate loans, the Obama mortgage could lower monthly payments if the fixed rate is lower than your variable rates. The Making Home Affordable program, or Obama mortgage, may be the homeowner relief you're looking for.

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Will the Obama Mortgage Lower My Payments?

After the announcement of the Obama Mortgage, formally known as the Making Home Affordable program, many homeowners found new hope to avoid default and foreclosure on their homes. The Making Home Affordable program or Obama mortgage may be the homeowner relief you're looking for.

One of the most frequently asked questions about the Obama mortgage is, "Will the Obama Mortgage lower my monthly payments?" While there's no single, simple answer to that question, you can learn quickly if this homeowner relief program is for you. Ask yourself a few simple questions about your Fannie Mae, Freddie Mac home mortgage or conventional loan:

Is my current mortgage rate higher than the current market rate?

Is my FHA mortgage rate fixed or adjustable?

What is the current interest rate?

For borrowers in variable rate loans, applying for a fixed-rate Obama mortgage could lower monthly payments if the fixed rate is lower than your variable rates. Don't forget to compare the current rates to both the rate you're paying now AND the rate you'll pay when the variable rate increases. The same logic applies for conventional loans.

If you are making interest-only mortgage payments may not see immediate lower mortgage rate payments, but if you refinance into a fixed lower interest rate (or one comparable to what you currently pay) you will save money over the long term by avoiding an increase in interest rates later on.

Another frequently asked question about Obama mortgages-will this mortgage rescue program lower the amount of money I owe on my mortgage? The answer to this question is simply "no". The Obama mortgage does not reduce the amount of the loan-the "principal amount". It only reduces the interest rate you pay on the principal.

Those who are current on their loans may wonder why they should apply for this kind of homeowner relief. Part of the guidelines for the Obama mortgage or Making Home Affordable plan includes giving borrowers the ability to get into better interest rates. Those who have lost value in their homes due to the bad housing market are often unable to qualify for refinancing because of that lost value. Making Home Affordable gives you the chance to take advantage of lower interest rates even though the value of your home has decreased.

The Obama mortgage is also designed to help borrowers get into stable interest rates, which is one reason why those with variable rate mortgages should consider applying. Homeowner relief comes in a variety of ways through the Making Home Affordable program. Never assume you don't qualify just because you aren't facing default or foreclosure.

FHA and VA loan holders should know that legislation is currently pending to offer the same kind of assistance currently offered to Fannie Mae and Freddie Mac borrowers. Watch this space for further updates on options available to FHA and VA loan holders.