The Obama Administration has made a commitment to help troubled homeowners. As part of fulfilling that commitment, a new web site from the Treasury Department and the Department of Housing and Urban Development provides great information and assistance for homeowners interested in the administration’s Making Home Affordable loan modification or refinancing programs.
With the interactive self-assessment tools available on MakingHomeAffordagle.gov, borrowers can find out if they are eligible to participate in the Making Home Affordable program and even calculate the monthly mortgage payment reductions they could realize.
The refinancing element of the Making Home Affordable plan is intended to help homeowners who are keeping current on their mortgage payments, but cannot get refinancing at advantageous interest rates because their homes have dropped in value since they got their loans.
If you are considering refinancing, you need to know that in order to be eligible, the first mortgage loan on your home cannot exceed 105 percent of the home’s current market value. For example, if the market value of your home is $300,000 and you owe less than $315,000, you may qualify.
Loan modifications are for people who can no longer make their mortgage payments, because their family income has been reduced or because the interest rates on their loans have increased. The goal of the loan modification is to reduce the mortgage payment to no more than 31 percent of the homeowner’s gross income. That is, income before taxes. A calculator is provided to show the homeowner an estimate of the new, lower mortgage payment.
To qualify for a loan modification, you will have to demonstrate to the satisfaction of the Treasury that you can make your modified loan payments for at least the first three months. If you make the first three payments on time, your modified interest rate will remain fixed for the next five years.
For all the program details, tips and pitfalls, be sure to carefully read the excellent Frequently Asked Questions collection.