Home Mortgage Modification Help - The Making-Home-Affordable Plan

The mortgage crisis has hit hard here in the states, with the downturn of the real estate and job markets, many people are facing the possibility of losing their homes. To combat the effects of the economy on homeowners, the Obama administration has gone to great lengths to help many struggling homeowners make their payments and keep their homes. Unable to make their monthly payments has hurt not only the individual, but also the lending institutions. The Making Home Affordable plan is a much needed hope in dire times.

Job losses, sickness, lay-offs, temporary unemployment and the likes have caused a reduction in the amount of people that are able to make their monthly mortgage payments. The government has decided to reward lending institutions for helping struggling homeowners stay in their homes by offering them Home Loan Modifications. The modifications allow lenders and borrowers to lower interest rates and lengthen the term of the loan. These two factors greatly decrease monthly installments.

Lending institutions benefit from these modifications. Homeowners that would be less likely to pay the amount required by the original terms of the loan are more likely to make the new modified payments. Though the institutions receive less money from borrowers per month, the lower amounts provide a way for more people to repay their loans, stay in their homes, and help deter foreclosures. Banks and lending institutions would rather keep customers in their homes, paying a lower monthly amount, than having them pay nothing and foreclose. At times such as the economic circumstances we face, companies and individuals are more willing to work with each other to avoid foreclosure. A mortgage modification is beneficial to both parties involved.

The terms of the loan are negotiable. The more you educate yourself about the loan modification process, the greater power you have for these negotiations. Home loan modification quotes are often free and can give you power when negotiating the terms of your loan.

Speaking with your lender and/or another modification specialist can help you know your options and prepare you for knowing the best way to modify your loan. By approaching your lender for a home loan modification, you take a step toward improving not only your own situation, but also that of the economy. Thanks to the Making Home Affordable plan, homeowners now have a way to meet their loan's demands and keep their homes.

Making Home Affordable Offers Home Loan Assistance to Homeowners

Last year, Making Home Affordable was introduced as part of Obama's Financial Stability Plan. The primary function of this government sponsored assistance program is to help homeowners easily afford mortgage payments through loan modifications and mortgage refinance.

Making Home Affordable programs are available to borrowers who are current with mortgage payments, but struggling to make ends meet. Individuals in need of mortgage refinancing must apply for the program prior to the June 10, 2010 deadline. Homeowners requiring loan modifications must apply prior to December 31, 2012.

At present, two new Making Home Affordable programs are in the works. These include a second lien modification program and foreclosure alternatives program. Both programs are expected to be in place by the end of April 2010.

In order to apply for Making Home Affordable programs, borrowers must work with their mortgage lender. Homeowners are required to undergo standard lending procedures and should be prepared to provide financial records including payroll records, list of income and expenses, and current tax return. Most lenders also require borrowers to submit a loan modification hardship letter.

The Home Affordable Refinance Program (HARP) is available to borrowers holding mortgage loans for residential homes consisting of up to four units. Qualification requirements of HARP include being current on the mortgage note and not being delinquent by more than 30 days during the previous twelve months. In addition, the mortgage note cannot exceed 125-percent of the home's current market value.

The Home Affordable Modification Program (HAMP) is available to homeowners that reside in single family residences or homes consisting of up to four units. Borrowers are allowed to apply for loan modification when their first mortgage is equal to or less than HAMP limits.

Loan modification limits provided at the Making Home Affordable website are: $729,750 for single family houses, $934,200 for a two-unit home, $1,129,250 for three unit home, or $1,403,400 for four unit houses.

Under HAMP guidelines, banks must reduce mortgage payments to no more than 31-percent of the borrower's gross income. This amount encompasses the principal, interest, homeowner's and mortgage insurance, and homeowner's association fees. In order to reduce monthly house payments, banks temporarily reduce interest rates and extend payment terms.

Borrowers facing foreclosure generally do not qualify for Making Home Affordable programs. However, anyone having difficulty making mortgage payments should contact their servicing lender to determine available options and to inquire about the upcoming foreclosure alternatives program.

Borrowers who receive approval for Making Home Affordable mortgage refinance or foreclosure alternatives program are automatically entered into a 90-day trial period. If homeowners cannot comply with HAMP terms, lenders can proceed with foreclosure.

Program details can be found at MakingHomeAffordable.gov. Borrowers can utilize mortgage calculators to determine if they meet eligibility criteria, as well as locate helpful resources and a list of frequently asked questions about each program.