A lot of homeowners have a good reason to be excited right now. The current economic recession has been tough on many hard-working homeowners, but President Obama's new Making Home Affordable plan may help them to lower their monthly payments.
Announced in mid-February, the Making Home Affordable plan went into effect March 4th, 2009. The plan is twofold. On the one hand, it will make refinancing a viable option for up to 4 or 5 million homeowners who currently don't qualify for refinancing. On the other hand, it will allow for home mortgage loan modifications.
Many people are either facing foreclosure on their home or are beginning to have trouble making payments. As more and more workers are laid off or are forced to reduce their hours or salary, the percentage of their total income that goes into their mortgage is increasing beyond their ability to pay. The plan will grant these loan modifications to eligible homeowners to reduce their monthly payments to 31% of their gross monthly income.
This new lower monthly payment must be kept frozen for a minimum of five years. After five years' time is up, the monthly payment may gradually increase to the conforming loan rate at the time of modification. It is important to note that homeowners do not have to be late on current mortgage payments in order to qualify for the home loan modifications.
Homeowners who take advantage of this type of loan modification are offered an additional incentive by the U.S. government. For every payment that they make on time, participants will get a payment that goes toward reducing the principal balance of their home loan. A homeowner who continues to make regular payments for five years, for example, can receive up to $1,000 per year under the home loan modification incentive plan.
There are a few stipulations about exactly who can qualify. The person must be a homeowner who lives in that property. That is, no "house flippers" or speculators can take advantage of the loan modifications. The participant must also provide proof of gross income and have a loan that was originated before January 1st, 2009. There can only be one loan modification per homeowner under this plan. Modifications can be initiated until December 31st of 2012. This program is currently open only to homeowners who have loans owned by Fannie Mae and Freddie Mac.
For additional information on home mortgage loan modifications, please visit the #1 loan modification resource on the net: http://home-loan-modifications.info
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