Mini-guide to home loan modification

Only a small percentage of eligible homeowners have yet to take advantage of the home loan modification program put in place by the Obama administration. Part of the reason could be that many lenders weren’t ready for the plan until June.

Yet there are also home owners who aren’t familiar with the program or don’t understand the process. This mini-guide will help fill in the blanks and hopefully encourage more people to take advantage of home loan modification.

Why should you take advantage of the home loan modification program?

Home loan modification will lower your interest rate. This decrease can subsequently reduce your monthly mortgage payments. If a homeowner is having financial difficulty, this plan could be a great solution. The savings can be substantial and can be reflected in your next mortgage payment.

Who can take advantage of the Home loan modification program?

Home loan modification is not meant to benefit the investor. The home must be the primary residence of the applicant. The home owner must prove financial hardship from circumstances outside of their control.

Applicants can not have declared bankruptcy or applied previously for the program. If a home has dropped over 15% in value, home loan modification can secure a better loan for a homeowner.

What will mortgage lenders do for the homeowner?

The approved mortgage lenders will ensure that the modification results in a more manageable arrangement. The mortgage payment after modification should not be more than 31% of the homeowner’s monthly income.

The Obama administration has set aside $75 billion to encourage lenders to help troubled borrowers. The modification program gives renewed hope to stressed homeowners. Can you get help? If you meet the eligibility requirements, in the words of President Obama, “Yes, you can!”