Mortgage Rescue Plan: Hardship on a Home Loan?
Monday, July 25, 2011
Facing a hardship on your home loan and need to get some help fast? The federal government has stepped in and is offering a 2% rate for borrowers who are struggling to make their mortgage payments due to a financial hardship situation. The current economic recession and housing meltdown has affected millions of American homeowners and is causing record numbers of mortgage defaults. The government is reaching out a helping hand with a home mortgage rescue plan that you may qualify for.
In most cases a mortgage modification will affect the interest on a loan, not the principal. Interest is typically what is crippling you, in the first place. A lot of times what has happened is that you acquired a mortgage with a low variable rate and as the economy changed so did the rate, possibly as much as 100%. The mortgage modification re-adjusts this interest rate, reducing it back to an amount you can deal with. By reducing the interest rate you can reduce the amount of the monthly payment and overall interest paid drastically. Sometimes this is only for a limited period of time, such as 5 years.
You do not have to be delinquent on your home loan to apply and qualify, but you must be able to demonstrate that you are at imminent risk of becoming late and are facing a hardship. The lender will ask you for a financial statement that details your current income, expenses, and assets. Based on the information you provide, they will then use a standard formula to determine if you meet the approval guidelines.
If you have a hardship on your home loan, then it makes sense to learn the very same formula your lender will use to determine if you qualify for help.
The money in this initiative goes to pay financial incentives of $1,000 to lenders and borrowers who participate in the program. If the lender deems that a modified loan with incentive payments is more profitable for them than foreclosure, the loan is modified. There will be a three-month trial period for modified loans. For the next 90 days, the borrower pays on the new modified monthly premiums, and if that is done successfully the modified loan terms stay in effect for the next five years.
The interest rate stays at its new low rate for those five years, after which it can be raised 1% per year until it reaches market averages. The President's Making Home Affordable project tries to respond to the concerns of real homeowners like you who are worried about high monthly premiums, due to loss of income or loss of home equity. Obama's loan modification plan will cut back on the country's high number of annual foreclosed homes, gradually causing economic conditions and house prices to go back up.
In most cases a mortgage modification will affect the interest on a loan, not the principal. Interest is typically what is crippling you, in the first place. A lot of times what has happened is that you acquired a mortgage with a low variable rate and as the economy changed so did the rate, possibly as much as 100%. The mortgage modification re-adjusts this interest rate, reducing it back to an amount you can deal with. By reducing the interest rate you can reduce the amount of the monthly payment and overall interest paid drastically. Sometimes this is only for a limited period of time, such as 5 years.
You do not have to be delinquent on your home loan to apply and qualify, but you must be able to demonstrate that you are at imminent risk of becoming late and are facing a hardship. The lender will ask you for a financial statement that details your current income, expenses, and assets. Based on the information you provide, they will then use a standard formula to determine if you meet the approval guidelines.
If you have a hardship on your home loan, then it makes sense to learn the very same formula your lender will use to determine if you qualify for help.
The money in this initiative goes to pay financial incentives of $1,000 to lenders and borrowers who participate in the program. If the lender deems that a modified loan with incentive payments is more profitable for them than foreclosure, the loan is modified. There will be a three-month trial period for modified loans. For the next 90 days, the borrower pays on the new modified monthly premiums, and if that is done successfully the modified loan terms stay in effect for the next five years.
The interest rate stays at its new low rate for those five years, after which it can be raised 1% per year until it reaches market averages. The President's Making Home Affordable project tries to respond to the concerns of real homeowners like you who are worried about high monthly premiums, due to loss of income or loss of home equity. Obama's loan modification plan will cut back on the country's high number of annual foreclosed homes, gradually causing economic conditions and house prices to go back up.
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