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FACTS to Know about Home Loan Modification Program

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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.

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Benefits of Debt Consolidation Home Mortgage Loan

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One gets Home Mortgage loan when he/she plans to buy a house. The lender and the borrower mutually agrees on some conditions, which they decide after proper understanding and consensus. Home Mortgage loan gradually extinguish, and the repayment time period is decided when the loan amount was offered.  The interest rate on loan can be fixed or kept floating. The Debt Consolidation Home Mortgage Loan is having lower interest than other loans.

Debt Consolidation Home Mortgage

Debt Consolidation is mainly considered for lowering the burden of loans. For example a person had taken various types of loans from different sources. So he/she will be having different amounts to pay back and also different interest rates. So, in such conditions Debt Consolidation is best choice to condense them all into a single loan.

By Debt Consolidation of home loans, you can get additional home loan on existing mortgage. Refinancing of home loans and home equity loans are some of the types in this category. The loan is kept intact by the lender as long as interest is paid for a fixed period and after that repayments are also done with no default pattern. Read the full story

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