Many homeowners across are nation are struggling to stay in their homes. To alleviate this crisis, the government under President Obama has come out with a stimulus plan to help struggling homeowners to refinance their mortgages rather than face foreclosure.
Under this stimulus plan, guidelines have been set for lending practices that will enable homeowners to pay their mortgage payments and to stay in their homes. The main crux of the stimulus plan is to make it easier for more homeowners to have current mortgages modified and to encourage banks to seek loan modification before pursuing foreclosure.
One of the provisions of the stimulus is to lower homeowner’s mortgage payments to 31% of their gross income. It is expected that the government will subsidize a large portion of this and will offer incentives to banks to encourage their participation in the program. In situations where the lender is unable to get the loan payment down to 31% of the gross income, the lender will be allowed to extend the loan to 40 years to lower the mortgage payments. Homeowners who get a lower rate by modifying their mortgage will be able to keep the low rate for five years, after which it will increase by 1% for each year thereafter. Another attractive feature for those who utilize this program is that if homeowners successfully make their payments that they may save a thousand dollars a year on their loan for five years.
There are a few credentials that homeowners have to meet to qualify for this program.
1. The current mortgage must be under $ 729,500.
2. The origination date of the mortgage has to be before January 1, 2009.
3. It must be a mortgage on primary home, homes that are investment homes or second homes do not qualify.
Homeowners must sign a statement of hardship and have proof.
5. The mortgage payment must be more than 31% of total income.
6. If total debt is more than 55% of total income, homeowners must attend debt counseling.
Final Tip: By researching and comparing the best loan modification companies in the market, you will be able to determine the one that meets your specific financial situation, plus the cheaper and quicker options available. However, it is advisable going with a trusted and reputable stop foreclosure specialist before making any decision, this way you will save time through specialized advise coming from a seasoned loan mods advisor and money by getting better results in a shorter span of time. Meaning getting your house out of risk as soon as possible.