The Obama administration introduced the new mortgage loan modification plans on March 4th 2009. This can be considered a huge lifeline and helping hand for those of you struggling to make your mortgage repayments. It is expected that the mortgage loan modification program will aid up to 9 million American homeowners. In this article i would like to answer some of the questions you may have about Obama’s scheme.1) In order to qualify for mortgage loan modification, you should have taken your loan out prior to January 1st 2009 and still be living in the property. Your home should also be worth less than $729,750.2) The mortgage loan modification plans are intended to help borrowers in financial difficulty. Although the majority of applicants have either been in arrears or facing foreclosure, this is not absolutely necessary to be approved. Many lenders would prefer that people approach them if they believe they are in financial hardship, this of course may be prior to you falling into arrears.3) Your mortgage payments should be adjusted to form no more than 31% of your monthly income. So if you believe that you are paying more than this on a monthly basis, you have a great chance of qualifying for mortgage loan modification. Usually your lender will drop the interest rate on your loan to as low as 2%. They may decide to extend the term of your loan to an absolute maximum of 40 years. They may even offer you a combination of these 2 things to ensure your payment falls within the 31% threshold.4) Unfortunately mortgage loan modification can be a complicated process. Due to the huge amount of applications expected, many lenders are unable to help borrowers with their paperwork. However, applications that have incomplete paperwork or missing documentation will simply be declined and you will be put to the back of the queue. There are professional mortgage loan modification companies that can help you through the application process, however, you can expect this to cost you in the region of $1500-$5000. I would hazard a guess that if you are struggling to meet your mortgage repayments, you are highly unlikely to have this amount of cash just “lying around”!
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