Even if your income isn’t helping you much in this economy, the government has a program that can minimize your mortgage payments to an affordable 31% of your gross income. However, you have to show that you are a prime candidate for the program. Here are a few pointers on how to get the loan.
Making Home Affordable
The Making Home Affordable program applies to mortgages under Fannie Mae and Freddie Mac – the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, respectively. With $75 billion behind the program, the aim is to cut interest rates to as low as 2% to help homeowners meet the 31% gross income cutoff mark for mortgage payments.
To find out if your loan is under Fannie Mae or Freddie Mac, visit their websites and give the information asked for verification. Even if you took your loan out from a bank, the bank may have transferred ownership of the loan to Fannie or Freddie.
Figuring out your mortgage payments
The amount you pay for your mortgage is not limited to the monthly payment. You will also have to take into account interest rates, taxes included and insurance used. Investigate each carefully, as some rates may have skyrocketed. It could also be the other way around, where your gross income has shrunk such that you no longer reach the 31% cutoff.
Just right for making your home affordable
Given that Fannie and Freddie rely on banks to service their loans, banks also decide who qualifies for the Making Home Affordable program. But with the sheer volume of applicants and the strict guidelines, the key here is to make sure that you fall into the “target market.” The challenge is to convince them that you need help, but not so much that they will deny you because you’re in too much distress.
Here are some tips:
- Savings accounts shouldn’t be too big. Why should they help you if your savings can tide you over? But you should have some savings, since it also shows that you are somehow able to save.
- You should have proof of employment, and that you will be employed for the next nine months.
- Your credit card debt, car loans, other debts and assets will be closely looked at. The idea here is balance. If you are seeking to cut your mortgage, but you have a large portion of your budget dedicated for school tuition in an expensive school, or perhaps even a club membership, then you probably won’t qualify.
- One way to get the bank’s attention is to miss one or two mortgage payments. It’s not an optimal solution, but it does work sometimes.
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