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While thousands of folks have found help under the various plans that were created by President Barack Obama in order to refinance their mortgages, many of these same people do not qualify for refinancing of their existing mortgages for various reasons. That is where the other part of the Obama plan can help – mortgage loan modification. Modification is different from refinancing your mortgage because it involves modifying the terms of the original mortgage loan in order to obtain a lower payment and oftentimes to escape a variable rate mortgage that has adjusted to a rate that is not affordable.
Benefits Of Mortgage Modification
If you are struggling to meet your monthly mortgage obligations, then you may possibly qualify for mortgage modification under this new legislation. If you modify your mortgage to a better rate, you can possibly save thousands of dollars over the course of the life of your mortgage. Many people are unable to make their mortgage payments because they are caught in a variable rate mortgage that began at an affordable fixed rate and then, after a period of so many years, adjusted to a rate that is determined based on market conditions. Some people who qualify for mortgage modification are paying over half of what they earn in mortgage payments alone. By modifying the terms of your mortgage loan to achieve a low, fixed rate, you can lower the monthly payments that you have to pay, and by modifying the terms of the original mortgage, you can stretch those payments out over a period of up to forty years in some cases.
Qualifying For An Obama Mortgage Modification Loan
Modification of your mortgage will help you achieve more favorable mortgage terms. To qualify for modification of your mortgage under this government plan, you must owe less than $729,500 on your existing mortgage, and your mortgage must have been written prior to January of 2009. You must live in the home that is being mortgaged, and you must verify your income from all sources and document your income by way of tax returns, pay stubs and income statements. You must also present the lender with a handwritten affidavit of hardship that details what caused you to become unable to pay your mortgage. Your debt to income ratio should ideally be 31% or less, but if this ratio is 55% or more, you must agree to undergo credit counseling in order to modify your mortgage.
Modification Different Than Refinancing
Refinancing is different than modification of your home mortgage loan. Modification is rewriting the mortgage so that the terms of the mortgage are more favorable, and so that you can get a lower rate of interest in order to stay in your home and avoid foreclosure.
Benefits For Thousands Of Homeowners
Mortgage modification can help thousands of homeowners, although many homeowners may assume that they do not qualify and never seek out the modification of their mortgage loans, which can lead to foreclosure. It is estimated that as much as sixty percent of homeowners can qualify for modification of their existing mortgages under this plan. Modifying your mortgage can pay off big; in fact, some homeowners find that they are able to modify their loans to a low interest rate of 2% fixed, although the average rate is slightly less than 5%. If you are worried that you might lose your home, now is the time to consider mortgage loan modification under the Obama plan.
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