Home Mortgage Modification Program

Mortgages

By Bill Witherman

Are you thinking about applying for a Home Mortgage Modification? A likely candidate for such a program would be a homeowner who has an existing mortgage (created before January 2009) who is facing financial hardship.

The source of this hardship can be lost income, medical bills, or that the cost of their mortgage has increased dramatically-such as when the initial interest rate on an adjustable rate mortgage expires. Often, the home has lost value compared to the amount the borrower owes, so the loan-to-value ratio is over 80%, which means that the borrower cannot refinance through conventional means.

There are programs available through the Federal government and administered by banks and other lending institutions. The Federal program, called Making Homes Affordable, is available to homeowners who have a good payment history on an existing mortgage owned by Fannie Mae or Freddie Mac; however, many lenders provide their own programs that do not have this requirement, so you should talk to your lender and see what programs they have available. You will have to select the program that is right for you.

These programs can modify your existing mortgage in a number of ways-they can lower the interest rate on your home to as low as 2%, extend the term of your mortgage to as far as 40 years, and possibly forbear or forgive a portion of your mortgage balance so that your mortgage payment is only 31% of your monthly household income.

The specifics of the implementation of the program vary from lender to lender. These programs are designed to be implemented in two stages. The first stage is a trial period for borrowers. Once borrowers can successfully document that they are able to meet the new payment schedule, the lender can convert the trial modification to a permanent modification. The schedule for conversion from a trial period to a permanent loan modification is not spelled out, so lenders vary in how long a trial period they require.

If you are having trouble meeting your mortgage payment, the first order of business is to talk to your lender. They may have a Home Mortgage Modification in place, or they may have several programs, and you need to find the right one depending on your situation. Lenders are not in the business of owning property-they do not want to foreclose on your property, and want to accommodate you as much as they can.

For detailed information on How to Obtain a Home Mortgage Modification, visit MortgageModification411.net

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