On Wednesday, the Obama Administration gave more details on their plan to help consumers to modify their loan with their financial institution. With the national number being close to 10% of all houses are either in foreclosure or late on their payment, President Obama and his staff have been busy trying to find the best solution to help lower this number and find a fair way to help home owners.
The plan is broken up to help to major groups of people. First, are those who have fallen behind on their mortgage payment and risk foreclosure, where the government plans to give banks incentives to work with troubled assets with the help of loan modification.
The second group of people are those who have remained current on their payments, but are unable to refinance their loan, because the value of the home has fallen below the value of the mortgage.
For those seeking to Modify Their Loans, here are the following rough requirements:
- Have secured your mortgage before Jan. 1, 2009
- Have a primary mortgage of less than $729,500
- You must live on the property
- Must fully document income with tax returns and pay stubs
- Sign a financial hardship statement
- Go for counseling if your total household debt totals more than 55 percent of income.
If qualifications are met, the lender will determine how much to lower your payment so that it is right around 31% of your gross monthly income. In doing so, banks could be willing to lower your interest rate as low as 2%!
For Those Seeking To Refinance Your Mortgage, here are the rough requirements:
- Your home must be the primary residence
- Your loan must be owned by Fannie Mae or Freddie Mac
- You must have sufficient income to support the new mortgage debt
- You can’t take cash out of the new loan to pay other debt
For those that qualify, they can be eligible for new loans up to 15-30 years fixed on market interest rates. There is also a good possibility of getting a significantly lower reduction in interest rate, just not principal.
So as you can see, the government continues to work hard to help save your house and make it easier for you to pay your mortgage. Even if you do not meet the requirements listed above, you may still qualify for help with your mortgage. The best thing to do is to get in contact with a representative. So start today, by filling out your application to get the process of your loan modified started today!
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