3 Things You Need to Know about the Home Affordable Modification Program
Have you or someone you know had problems making your mortgage payments? Have you modified your home loan to help keep your property out of foreclosure? The Treasury and Housing and Urban Development departments recently announced that homeowners whose mortgages were modified to stop foreclosure could receive an additional $5,000 reduction in their loans from the government next year via the Home Affordable Modification Program (HAMP). Here are 3 things you need to know about the Home Affordable Modification Program and how it could affect you next year.
1.) The additional $5,000 reduction in home loans could impact roughly one million borrowers who received reduced mortgage rates through the HAMP during the Great Recession. The discounted two percent mortgage rates are scheduled to rise by a percentage point for many of these borrowers entering the sixth year of the program. That would increase monthly payments for those who might still be struggling to find work or additional income.
2.) The new plan is designed to soften the shock from higher interest rates — and thus higher monthly payments — on HAMP borrowers. Nearly two-thirds of the program's borrowers have less than twenty percent equity or owe more on their mortgages than their homes are worth, causing underwater mortgages that are putting them in a fragile financial situation.
3.) This latest principal reduction would be in addition to the $5,000 in government payments made during the first five years of the loan modification. Because of the combined $10,000 in principal reduction, qualifying borrowers would have the option of adjusting their mortgage terms to pay on average of fifty dollars less a month. Otherwise, those borrowers could repay their mortgages ahead of schedule.
For more information about the HAMP program changes, visit www.makinghomeaffordable.gov. If you have concerns about the home loan payment reduction or would like to know if you are eligible to qualify for this program, please contact the Russo Team today. - Frank
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