FACTS to Know about Home Loan Modification Program

If you are willing to avail the mortgage modification program that is offered by the federal government then you have to know about some important facts about it. Understanding of these facts will help you to take right decision about whether you should avail this program or not and many other things related to it. Let’s have a look on these important facts.

Who is Eligible for Home Loan Modification?

eligibility for home loan modification

It is important to find out whether you are eligible to apply for this modification plan or not. Basically, borrowers having mortgages that are behind on their mortgage payments are eligible to file for loan modification plan. In other words, it is for those home loan borrowers who have not missed their payments, but they are having payments of more than 31 per cent on their total monthly earnings. This modification program is only designed for Freddie Mac or Fannie Mae mortgages. Borrowers having difficulty in repaying their loans can take help from this modification plan.

Amounts of Payments

With the new program of home loan modification, payments for mortgage cannot be lowered more than 31% of your total monthly earnings. To meet this particular requirement, loan authorities are bound to apply the lower interest rate. The limit for the minimum interest rate is 2% that is applied on the total amount of mortgage loan. Alternatively, if lenders fail to lower the interest rates, then they have to extend the term of loan and that can be extended for up to 40 years.

The interest rate will be fixed at 2% for 5 years. After five years, interest rate will rise 1% each year until it returns to its original position where it was started at first.

Government Help

With the new mortgage modification program, loan authorities can shrink your mortgage payments to 38 per cent of your total monthly income. Government will then play its role and it will subsidize this loan to make it easy for you to pay only 31 per cent of your total monthly earnings.

In addition to this, government will also help you by giving incentives to the banks so they can effectively participate in the mortgage modification plan.

Your Loan Qualification

home loan modification program

Loan modification program is not for people who could not repay their loans just because of their irresponsible behaviors. It is important to note that people having investment properties, lied on their mortgage agreements or those who have purchased highly expensive house of worth in many millions are not eligible to take mortgage loan modification program.

People who are at high risks of losses are eligible for this modification program. You can avail this helpful program only if you have one of the following problems.

  • Low income
  • Serious adversity
  • Huge debt compared to your limited income
  • If you are at the risk of becoming default
  • If you owe more than the actual value of your home
  • If you are dealing with rise in interest rate

What is not included in Modification Program?

The mortgage loan modification program involves only those loans that were taken out before 1st January of the year 2010. Besides, loans that have taken out on assets worth more than $729, 750 are not eligible for mortgage loan modification program.

You can easily qualify for the mortgage loan modification program if you cannot afford to repay your mortgage loan. After getting a modification loan, you will be able to pay off your mortgage payments.


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One Response to “FACTS to Know about Home Loan Modification Program”

  1. Andrew says:

    Thanks for the informative content of your blog. Keep it up.. :)
    Andrew recently posted..What is the Bad Credit Loan

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