The program is called Making Home Affordable. This program is designed to cut your mortgage payment to 31% or your gross household income. Even if it means cutting the mortgage rate on your loan to 2%. This is a great program, however, there is some tricky maneuvering to be done to get the qualification green light. Here is some information on the program as well as tips on the qualification.
The Making Home Affordable program is the newest of the loan modification programs. The mortgages have to belong to Freddie Mac or Fannie Mae. These are the two large mortgage loan holders the government took over about a year ago. They are cutting rates to as low as 2% in an attempt to reduce your payments to no more than 31% of the homeowners gross income.
The first thing you need to qualify if for one of these two companies to own your mortgage loan. Even if you received your home loan from a commercial bank, that does not mean that Freddie or Fannie does not hold the mortgage now. These two companies buy many loans from commercial banks.
When you visit the Freddie Mac and Fannie Mae websites, just fill in the information that they ask for about your home and yourself at both sites to find out if they own your loan. No matter what you think, this is worth a shot, you won’t know for sure if they own your loan or not until you check. Sometimes the bank that you received the loan from will sell the loan to one of the agencies and then still service the mortgage, leaving you to believe the bank still owns the mortgage.
To estimate if you qualify, figure the amount of your mortgage payment (including principle, interest, taxes and insurance) and figure what percentage this amount is of your gross income. There are two reasons you know that you have and excellent chance to qualify.
Two other ways you will qualify are; If you have an adjustable rate mortgage that has almost doubled in payment and mortgage loan rates. The second is if you qualified for your loan with household income and one of you lost a job or had a cut in hours worked.
To qualify, you have to convince the lender that you are in a tough place now but with the new mortgage, you will be fine and keep up on all payments. You will not qualify if you have a lot of money in the bank, you will not qualify if you have just a little bit of money in the bank. You will not qualify if you have a large amount of credit card debt, or high payments on car loans.
You cannot be in to bad of position ether, for example, you won’t qualify on unemployment income that is considered a 6 month income, and the requirement of employment is a strong chance of continued employment for 9 months or more.
You get the picture, the window for qualification is small, and one Lender stated “it would not hurt to go delinquent by 1 or 2 months, I feel terrible saying that but that will get the banks attention”.
You can find help with the qualification process of this program through HUD and some other non=profit organizations on line.
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