Everyone is buzzing about President Obama’s Stimulus Package. In case you didn’t know, he not only bailed out failing banks and businesses, but he set aside a 75 billion dollar allocation to rescue troubled homeowners. This help is available for those who qualify and successfully complete the Loan Modification Process. But, what is involved in doing that?
Banks and lenders are receiving financial incentives to rework existing mortgages for homeowners who are struggling and facing possible foreclosure. The new mortgage is structured to reduce the monthly payment for the homeowner and hopefully allow them to stay in their home. This is done by one or all of the following: reducing interest rates, lengthening loan terms, waiving late fees that have accumulated, and even reducing or forgiving a portion of the principal amount of the loan.
If you qualify, you will receive a house payment that is less than 31% of your monthly gross income. This payment figure also reflects the property taxes, homeowner’s insurance, and homeowner association dues.
What qualifications are necessary to apply and begin the Loan Modification Process?
· Your lender must be on the Approved Lender List with the Treasury Department.
· Your loan must be backed by Fannie Mae or Freddie Mac.
· Your original mortgage had to have been written on or before January 1, 2009.
· The loan amount cannot exceed $729,750.
· Your current house payment must be over the 31% target line to qualify as being unaffordable and needing modification.
· You must be experiencing a documentable state of financial hardship. Events and circumstances beyond your control have made it impossible to continue making your current higher house payment.
· You also need to be able to present a budget proving that you are able to make the new, adjusted house payment. You also must convince the lender that you are committed.
Before you begin the Loan Modification Process, you need to compile all your paperwork, budget figures and documentation. After you have gotten everything in order, then contact your lender, but not before. You can only apply one time, so it needs to be done right!