Here are the main qualifications for a Making Home Affordable Loan Modification via the Making Home Affordable Plan:
1) You must be the owner of a one- to four-unit property.
2) You should have an unpaid principal balance that is not more than $729,750. There is a higher limit for those who have more than one unit; – do check with your servicer for more information.
3) Your loan should have taken out before January 1, 2009.
4) Your mortgage payment should not be more than 31% of your gross monthly income, the said payment including taxes, insurance and dues that come with it.
5) Your mortgage payment has become unaffordable, due to a major change in your income or expenses. This applies mainly to those who can still make their payments, but are seeing that their payments will soon be unaffordable. Finally, this only applies to first mortgages.
The modification is primarily in the interest rate, similar to refinancing. However, whereas refinancing seeks to have a stable interest rate throughout the life of the loan, in modification, the rate remains stable for five years, after which the interest increases by one point a year until it reaches the rate cap agreed upon in the modification. The target lowest interest rate is 2%. It is also possible that a bulk payment will be done at the end of the loan.
The deadline for loan modification is on December 31, 2012, at which point all actions for modification should be finished.
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