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Mortgage loan modification information for homeowners

BY: David Prakash Kumar | Category: Business and Finance | Post Date: 2010-01-15

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   David Prakash Kumar
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Home Mortgage Loan Modification

Home Mortgage Loan modification is just simply a mortgage refinance so that you would be eligible for more affordable and efficient payment according to your financial situation. This is the main reason it is being described as Mortgage Loan Modification. Moreover, it would be just changing the terms of your current loan without applying for a new loan

Who will qualify for the Loan Modification?

There are actually two category of people who will be eligible for this Home Mortgage Loan Modification. Firstly, the people whom are behind in their payment (could not pay) can apply for mortgage loan modification. Other than that, mortgage holders who have never ever missed their payment and have at least 31% more than their monthly income can apply for the loan modification program. So basically, Home owners can actually take advantage with this loan modification program without struggling to pay the loan.

Will the repayment be reduced?

Of course the repayment of the loan will be lowered and even the interest will be lowered but only up to 31% of the house owner's monthly income. If the interest rate is not lowered, the loan providers will extend the duration of the loan repayment maybe for 40 years. If the new interest rate is being applied that it will be locked with the loan for at least 5 years. However, after the 5 years period of time, the interest rate will increase by 1% every year, until it comes back to the initial interest rate.

Will the government ensure the modification of the loan?

Basically, under the terms and conditions of the loan modification program loan providers are just required to reduce their mortgage payment to 38% of the monthly income. However, the government will subsidize the loans so the homeowners are just required to pay 31% of their monthly income. Further, the government is giving special privileges for the loan provides who takes part in the loan modification program.

You must show your hardship

Admission officers are looking seriously into this matter because there is a lot of cheating happening in this loan modification program, where there were some of them who bought investment properties, but lied on their mortgage document . So these kinds of people would not be eligible for the loan modification.

It was told that there was lots of ways to show the hardship the home owners are going through and if they are going through one of the situation will be eligible for loan modification. The situation as following:

Income lower that earlier
Increase in expenditure due to children etc
High debt compared to monthly income
They have loan amount which is more than their house rate.

Excluded things in loan modification

It was told to the press and the government that the house which cost more than $700,000 will not be eligible for home loan refinancing modification.

However, loan modification programs are just becoming mainstream and it is advised that you should meet financial consultants or mortgage brokers for more details about the terms conditions of the loan modification program.

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