Different Components Of The Federal Home Loan Modification Program

The federal loan modification program initiated by the Obama administration in March 2009 is supported by a $ 75 billion stimulus package. But borrowers, who have gone upside down on their existing home mortgages, need to know certain important aspects associated government backed loan modification or home refinancing process.

The federal HAMP loan modification program initiated by the Obama administration in March 2009 is supported by a $ 75 billion stimulus package. The plan which is popularly known as "Home Affordable Modification Program" (HAMP) is designed to help millions of distressed American homeowners save their houses from possible foreclosures or short sale and overcome their financial hardships. But borrowers, who have gone upside down on their existing home mortgages, need to know certain important aspects associated government backed loan modification or home refinancing process.

Eligibility requirements

To modify your mortgage loans you should first qualify for a loan modification under the federal scheme. And in order to be eligible an applicant should satisfy the below mentioned basic conditions.

1. Existing home mortgage should have been sanctioned prior to 1st January 2009.
2. The home to be mortgaged has to be the primary residence and not an investment property.
3. The value of the current mortgage should not exceed $ 729, 500 for a single unit home.
4. Proof of regular income and steady employment needs to be furnished.
5. If you owe more than 55% of your income, get credit counseling from government notified agencies is compulsory.

Proof of financial hardships

All financial hardships are required to be listed along with the reasons such as major illness, dwindling income due to loss of job, increase in interest rates. Additionally, the borrower should be able to prove that he owes more on the home than its current market value. Thus, home loan modification plan intends to help responsible house makers and not designed to bail out homeowners who have run into debts because of irresponsible use of credit cards.

You could save lots of money

Once you get qualified for a loan modification, your monthly mortgage payments could be drastically reduced to 31% of your gross monthly income. Additionally, you could secure interest rates as low as 2% for a fixed period of five years. Later on the rates of interest could go up by one percent annually until the prevailing or original interest rate is reached. Nevertheless, when you are out to modify mortgage loans you can extend the term of the finances up to 40 years.

An expert guidance is needed to understand the intricacies involved in the federal loan modification and home refinancing procedures. Hence, it is always recommended to obtain professional help available online, from reputed service providers like Refinanceitt which could enable you to secure proper guidance. Get assistance from professionally qualified and highly experienced loan modification attorneys which are very much required to thoroughly to understand loan modification application.