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Digital News Report – Are you struggling to make your monthly home loan payments? You might be able to participate in Obama’s Government Home Loan Modification program called Making Home Affordable. Like any government program, you are must meet their eligibility requirements in order to participate. Here is an overview of what they are looking for.
The home needs to be your primary residence and you owe less than or equal to $729,750 on the home. You need to be having trouble making the monthly mortgage payments. You needed to have got your current mortgage loan before January 1st of 2009. Your mortgage payment, which includes the principal, interest, taxes, insurance, and HOA dues, is over 31 percent of your current gross income.
If you have meet these requirements you can look into have your home loan modified. If you are not sure talk to your lender or a HUD approved housing counselor to find out for sure. Your bank needs to be participating in the program, and you will need to provide documentation to your lender in order to start the process. Once approved for the home loan modification, you start with a trial modification. Once that time period is completed successfully, your home loan would then become permanently modified.
The modification can work in several different ways, one way is through earned principal forgiveness, another is to lower the interest rate, and the third way is to extend the length of loan’s repayment time. The earned principal forgiveness is set over a couple of year time period, as you are successful at repaying the home loan, the amount of the principal will be forgiven incrementally and you will not have to repay that amount of the loan. This has been put in place because many home loans are higher than what the homes are currently appraised for. The interest rates are at a much lower rate, and many homeowners are faced with an adjustable rate mortgage, with the home loan modification they can be refinanced to a fixed rate interest loan, making their home mortgage payments more affordable. By extending the length of time to repay the loan, it can help lower the monthly payment so that the homeowner can reach that 31 percent of their monthly income ratio.
A helpful tool provided by the Government website, Making Home Affordable is the Mortgage Payment Reduction Calculator. It will help you determine what your monthly mortgage payments can be reduced to based on your monthly income and your current mortgage payments. Don’t forget to include property taxes, and mortgage insurance or your HOA fees if you have them as part of the monthly mortgage payment.