Are You Eligible for Mortgage Help?
Are You Eligible for Government Mortgage Help?
Today, the cost of living has increased immensely and many people are searching for ways to cut costs. Nationwide, families and individuals are not only struggling with basic household needs but they are also finding it difficult to make their house payments. Yet with President Obama’s Making Home Affordable program, monthly housing payments can be affordable. The Making Home Affordable program is designed to rescue the nation’s failing housing market by helping homeowners restructure their loans. The program has two separate components that are closely linked together; the Home Affordable Refinance and the Home Affordable Modification.
There are eligibility requirements for both programs in order to refinance or modify your current mortgage. Each plan has its own requisites.
Home Affordable Refinance
The Home Affordable Refinance program can help borrowers refinance their home into a 15 or 30 year fixed rate loan. As well, even if what is owed on the mortgage is slightly more than what the home is worth the program will assist in refinancing.
New payment rates are based on the current market mortgage rate at the time of refinancing. The new rate is also based on a borrowers associated points and fees with the lender.
Once a homeowner is approved for the Home Affordable Refinance program they cannot take cash out of the equity in their home to pay other bills, only transaction costs can be involved in the refinanced account.
Qualifying Under the New Finance Plan:
Homeowners with a conforming loan securitized or owned by Freddie Mac or Fannie Mae. Additionally, the first mortgage on the home cannot exceed 105% of the current market value of the property.
Homeowners must live in the home that is to be refinanced and it must be the borrowers primary address. As well, the home must be a one to four unit property and the homeowners must have sufficient income to make payments on the new loan terms.
Borrowers must be current on their mortgage payments with the initial mortgage dated before January 1, 2009.
2009 Conforming Loan Limits for most areas of the United States:
- Single-family homes: $417,000
- Two-unit properties: $533,850
- Three-unit properties: $645,300
- Four-unit properties: $801,950
There are areas in the United States where the loan limits can vary if a homeowner resides in a high cost housing market region. A borrower can get more information from the Federal Housing Finance Agency to find out about various limits as well as a list of specific limits for high cost housing.
Unqualified Homeowners:
Any homeowner who is delinquent on their mortgage payments.
Homeowners who have loans that are not owned by Freddie Mac or Fannie Mae including jumbo loans.
Homeowners who do not have enough income to manage or afford the new mortgage plan payments.
Borrowers whose first mortgage exceeds 105% of the current market value of their property.
If a borrower does not qualify for the Home Affordable Refinance program then they should work with their mortgage lender to discuss other loss-mitigation options. A homeowner may have other options besides foreclosure such as deeds or short sales. Other options like rescue grants, loans, or standard refinancing may also be available.
Fees and Costs:
Although the costs are usually minimal, the homeowner may be required to pay closing costs and lender fees. It is recommended that a homeowner talk with their mortgage lender to see what the fees or closing costs will be.
Needed Documentation and Forms in Order to Qualify:
- A homeowner who applies for the Home Affordable Refinance plan must fill out and sign a Request for Transcript of Tax Return: Form 4506-T, and also provide a copy of their most recent tax return on file.
- Homeowners must give copies of their two most recent pay stubs. If a homeowner is self employed then they must verify their income with third party documentation such as business paychecks or bank deposits.
- A borrower must verify property owner status with a credit report or with any other documentation.
- All credit card balances and the monthly payments due.
- A homeowner needs to provide account balances and monthly payments due on all loans such as car loans, student loans, or any other loan.
- All information that refers to a second mortgage.
Second Mortgage:
A homeowner may still qualify for the Home Affordable Refinance plan if they have a second mortgage as long as the first mortgage does not exceed 105 percent of the property value and the second lender agrees to subordinate to the new first mortgage. In the case of a default, the second lender would have to agree that the first mortgage would be paid before the second one.
Resources:
- To find out if a loan is securitized or owned by Freddie Mac call 1-800-Freddie or go on-line. To find out if a loan is securitized or owned by Fannie Mae call 1-800-7Fannie or go go on-line..
- Contact your mortgage lender or provider to see if you qualify for the Home Affordable Refinance plan.
- Visit the official government site at http://www.FinancialStability.gov for programs that are affiliated with the Home Affordable Refinance plan.
- The Home Affordable Refinance program expires in June 2010.
Home Affordable Modification
The Home Affordable Modification program can help borrowers lower their monthly mortgage payment as low as 31 percent of the homeowners gross monthly income. There are no costs or fees associated with the program. As well, mortgage lender assistance is voluntary, but once government money is received the lender is required to participate. Additionally, any institution that participates in the program must evaluate all potential eligible loans that the borrower calls or writes and asks about.
Qualifying Under the New Modification Plan:
- Homeowners who can prove that they are unable to make monthly mortgage payments. Proof can be late payments or the risk of imminent default on a mortgage.
- Homeowners must live in the home that is to be refinanced and it must be the borrowers primary address.
The borrowers eligible mortgage must have been originated before January 1, 2009.
The maximum loan amount is with an unpaid balance of up to $729,750 for a single-family home, $934,200 for a two-unit home, $1.129 million for a three-unit home and $1.403 million for a four-unit home. - Including taxes, insurance, and homeowner association dues; the current mortgage must be more than 31% of the homeowners gross monthly income.
- A Net Present Value assessment will be done by the homeowners mortgage lender to determine if the loan modification will provide a better option for the borrower than foreclosure. Participating lenders are required to offer the loan modification if the cost of adjusting the loan is less than the cost of foreclosure. The assessment is done by calculating the cost to modify the homeowners mortgage with a debt-to-income ratio between 31 to 38 percent.
Unqualified Homeowners:
- All vacant or condemned property.
- Homeowners who owe more than the maximum loan limits.
- Homeowners who can easily afford their current mortgage payments and whose property value is less than the money they owe on the mortgage.
- Borrower who do not qualify for the Home Affordable Modification program are encouraged to work with their mortgage lender to discuss other loss-mitigation options. A borrower may have other options that include local resources rescue grants, and loans that help with refinancing and loan modifications. If a borrower is unable to keep their home short sales and deeds are optional instead of foreclosure.
- There are also other ways to modify a loan such as extending the length of the loan up to 40 years in order to reduce the level of the mortgage payments, forbearing the principal by delaying payment to a future date, and forgiving some of the principal.
Needed Documentation and Forms in Order to Qualify:
A homeowner who applies for the Home Affordable Modification plan must fill out and sign a Request for Transcript of Tax Return: Form 4506-T, and also provide a copy of their most recent tax return on file.
Borrowers must provide copies of their two most recent pay stubs. If a homeowner is self employed then they must verify their income with third party documentation such as business paychecks or bank deposits.
Homeowners must sign an affidavit of financial hardship. Additionally, a borrower must proof that they do not have sufficient assets to make their monthly mortgage payment by providing recent bank account and investment statements.
Proof of primary residence status must be verified through a credit report.
Modify a Mortgage:
In order to modify a mortgage a lender needs income verification if the homeowner has a “front-end” debt-to-income ratio of 31% or more. The front-end ratio is the ratio of a homeowners monthly gross income to monthly principal, property taxes, interest, property insurance, homeowner association payments, and condominium payments.
A homeowner may still qualify for the Home Affordable Refinance plan if they have a second mortgage as long as the first mortgage does not exceed 105 percent of the property value and the second lender agrees to subordinate to the new first mortgage. In the case of a default, the second lender would have to agree that the first mortgage would be paid before the second one.
- Also, the lender adds the following to the unpaid loan amount:
- Past due taxes and insurance.
All accrued interest. - Third party delinquency charges such as inspections on the property.
- Escrow advances paid by the lender, excluding late fees or default fees charged by the lender, those fees are forgiven with this program.
The lender then calculates how much of an interest rate reduction is needed to get the homeowners mortgage payment to a 31 percent debt-to-income ratio. The interest rate base is two percent. If the debt-to-income ratio is more than 31 percent after adjusting the rate down to 2 percent, then the mortgage lender will have to find other ways to modify the loan.
Approved Loan Modifications:
Initially a homeowner is on a three month trial modification with the new interest rate and payment. At the end of the three months a modification agreement that includes escrow payments for insurance and taxes is signed, if you stayed current.
The new interest rate will be a fixed rate for a minimum of five years if the rate is below the market rate on the date of the modification agreement. On the sixth year the rate may increase 1 percent point per year until it reaches the market interest rate on the date of the modification.
After the three month trial period, borrowers are given “success incentives” for making payments on time. The payments are made to the lender to reduce the principal on the mortgage and it can be up to $5,000 at the end of the five year the program.
Debit Counseling Program:
Borrowers with a 55 percent or higher debt-to-income ratio are required to meet with a counselor from a National Foreclosure Mitigation Counseling Program, a HUD-approved housing counseling agency, or NFMC.
Balloon Payments:
Balloon Payments are also an option if the lender defers payment on the principal. Although the principal will have to be repaid when the loan is refinanced, paid off, or the house is sold.
Second Mortgage:
A borrower may still qualify for the Home Affordable Modification plan if they have a second mortgage as long as the second lender agrees to subordinate to the new first mortgage. If there was a default, the second lender would have to agree that the first mortgage would be paid before the second one. As well, the government plans on offering incentives for lenders who get rid of second liens for loans that are modified under the program.
Foreclosure:
If a home is already foreclosed and a borrower is applying for the Home Affordable Modification plan, lenders may try to postpone foreclosure on a mortgage if you meet the eligibility requirements until the loan can be evaluated and the borrower can qualify for the program. It is best to ask your mortgage lender to see if this is an option.
Resources:
Contact your mortgage lender or provider to see if you qualify for the Home Affordable Modification plan.
Visit the official government site at http://www.FinancialStability.gov for programs that are affiliated with the Home Affordable Modification plan. There is a list of participating lenders that will be available as contracts are signed with the lenders.
The Home Affordable Modification program expires in December 31, 2012.
Brand new Residential Product sales Declined Sharply Last 30 days
Brand new Residential Product sales Declined Sharply Last 30 days
Sales of new properties declined unexpectedly in July, the federal government said on Friday inside the 2nd statement this week that indicated that the real estate market stalled final thirty day period.
The Commerce Department reported that sales of new properties in July fell 12.4 % from June, to a seasonally adjusted yearly rate of 276,000 units. That was the lowest level in July since the government began keeping track in 1963
July product sales of new properties had been 32.four percent under revenue for July last year. Analysts surveyed by Thomson Reuters had expected revenue to be flat in July from June. June revenue had been revised down to a seasonally adjusted annual rate of 315,000, from 330,000, right after May well fell to an annual rate of 267,000.
The document also stated the median product sales price tag was $204,000 in July, down 6 percent from June and 4.eight % from July last year. The average product sales selling price was $235,300 in July, down 3.1 % from June.
July was the 1st thirty day period that house buyers could no longer are entitled for a tax credit of as a lot as $8,000, which analysts said might have contributed to the decrease.
The document was published a day after the National Association of Realtors reported that income of employed real estate in July plunged to their smallest degree in a lot more than a decade, as residence buyers lost the incentive of a govt tax credit. The association stated that the seasonally adjusted annual revenue rate of 3.83 million was 25.five pct beneath the level of July last year.
Home loan rates are the smallest in modern memory although affordability, mainly because of price tag declines of 30 pct in several regions, may be the highest in a minimum of a decade. The federal government allows buyers to put only a token amount down, guarantees loan providers against default and frequently issues proclamations that the worst is over.
Still, with unemployment steady for months at much more than 9 percent, and with millions heavily in debt or merely skittish, several potential buyers are sitting on the sidelines.
Genuine estate helped drive this recession, and no one should expect it to lead the way out. Instead, the urgent question is how very much it will probably hinder additional parts with the fragile recovery
Some other economic statistics released Wednesday also reflected the sluggish pace in the recovery. Even the manufacturing sector, once considered a strong point, appeared to struggle.
Orders of big-ticket items from American factories rose under forecast in July, an indication that manufacturing was beginning to weaken, the Commerce Department reported Wednesday.
It said orders to American factories for durable goods rose .three % final month, significantly less than the 3 pct development that had been forecast. Excluding the volatile transportation market, orders decreased 3.8 %. Orders for machinery slipped 15 percent, even though those for capital goods decreased 8 pct.
On Friday, the government may provide its latest estimate on second-quarter growth. Analysts now expect that growth inside the quarter will be revised down to an yearly rate of 1.four pct from the past estimate of 2.4 %.
Though the low rates have not spurred home purchasing, the demand for residence re-financing loans final week hit a 15-month high, the Property finance loan Bankers Association stated Friday in a statement.
Refinancing accounted for 82.4 % of entire applications final week up from 81.four percent the past week, which is the highest share since January 2009, the association said.