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Many homeowners across are nation are struggling to stay in their homes. To alleviate this crisis, the government under President Obama has come out with a stimulus plan to help struggling homeowners to refinance their mortgages rather than face foreclosure.
Under this stimulus plan, guidelines have been set for lending practices that will enable homeowners to pay their mortgage payments and to stay in their homes. The main crux of the stimulus plan is to make it easier for more homeowners to have current mortgages modified and to encourage banks to seek loan modification before pursuing foreclosure.
One of the provisions of the stimulus is to lower homeowner’s mortgage payments to 31% of their gross income. It is expected that the government will subsidize a large portion of this and will offer incentives to banks to encourage their participation in the program. In situations where the lender is unable to get the loan payment down to 31% of the gross income, the lender will be allowed to extend the loan to 40 years to lower the mortgage payments. Homeowners who get a lower rate by modifying their mortgage will be able to keep the low rate for five years, after which it will increase by 1% for each year thereafter. Another attractive feature for those who utilize this program is that if homeowners successfully make their payments that they may save a thousand dollars a year on their loan for five years.
There are a few credentials that homeowners have to meet to qualify for this program.
1. The current mortgage must be under $ 729,500.
2. The origination date of the mortgage has to be before January 1, 2009.
3. It must be a mortgage on primary home, homes that are investment homes or second homes do not qualify.
Homeowners must sign a statement of hardship and have proof.
5. The mortgage payment must be more than 31% of total income.
6. If total debt is more than 55% of total income, homeowners must attend debt counseling.
Final Tip: By researching and comparing the best loan modification companies in the market, you will be able to determine the one that meets your specific financial situation, plus the cheaper and quicker options available. However, it is advisable going with a trusted and reputable stop foreclosure specialist before making any decision, this way you will save time through specialized advise coming from a seasoned loan mods advisor and money by getting better results in a shorter span of time. Meaning getting your house out of risk as soon as possible.
The current economic state and the inflation has lead to a substantial rise in the cost of living. The increased cost makes a government mortgage help plan absolutely vital, as monthly mortgage costs are the biggest cost that families have to bear. With rising household costs and mortgage payments, families can fall into a financial crunch if not crisis. But there is relief. This new plan from President Obama aims to help certain homeowners to restructure their mortgage plan so as to make it more affordable. This government mortgage help plan has two main components that the people can make use of – Home Affordable Refinance and Home Affordable Modification. To make use of these plans, you have to meet certain eligibility criterion. Each of the two plans has a separate set of eligibility criterion that you are required to have before you can use these plans to your benefit.
Home Affordable Refinance
This government mortgage help plan allows the borrower to refinance his mortgage or home loan into a fixed rate loan for a time period of 15 or 30 years. Even in the case where the home is worth less than what is still owed on the mortgage, you can apply for this plan. The new rate is dependent on the points and fees associated with the lender and the mortgage rate as it is at the time of refinancing.
To qualify for this program, the house in question should be the primary address and residence. Fanny Mae or Freddy Mac securitized or owned loans are the only applicable loans. The first mortgage should not exceed 105% of the house’s value in the market at the time. The mortgage’s date should be before 1st January, 2009 and you have to be current on the payment. The property in question should be a one to four unit property and the conforming loan limits are as follows:
* Single-family homes: $ 417,000
* Two-unit properties: $ 533,850
* Three-unit properties: $ 645,300
* Four-unit properties: $ 801,950
Home Affordable Modification
This government mortgage help plan is for the people who are unable to pay their monthly mortgage payments. Along with assistance from the mortgage lender, this plan can effectively bring down the costs of the monthly mortgage payment to an amount as low as 31% of your gross monthly income.
To qualify for this mortgage help, you will have to effectively prove that you cannot pay your monthly mortgage payment. Constant delays in the payments or risk of a default on a payment could be the proof. The house or property in question should be the primary address as well as the permanent residence and its mortgage’s date should be before 1st January, 2009. The maximum loan amount to be applicable for this program should be up to $ 1.403 million for a four-unit home, $ 1.129 million for a three-unit home, $ 934,200 for a two-unit home and $ 729,750 for a single-family home. The mortgage payment should be more than 31% of the net, gross monthly income.
In both these plans vacant or abandoned property is not applicable. Many other clauses also exist about the non qualification for these government mortgage help plans.
Government mortgage help plan offers latest news for the general public to help them survive in this time of less income.
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The financial crisis has led the Government to come up with a range of government mortgage help programs. But they can be a little difficult to find. Ads that talk about the new legislation seldom lead a person onto the right path. Here is a review of the programs and places where a person can get government mortgage assistance.
Government Mortgage Help Programs
The most sensible way to obtain genuine advice is to talk to a HUD-approved counselor. The counselor will offer authentic information about the help programs and how does a person qualify. They’ll know everything that is available after discussing the loan takers situation.
A person does not have to pay any fee for these help programs. Analysis and counseling is absolutely free. In fact, the homeowner must be wary of somebody who asks for a fee.
Be Careful of Scams:
If a person does a loan modification with a lender, he or she will have to pay some fee. But it is not a part of the government program; it is only an agreement the borrower comes to with the bank or the lender. Some genuine government help with mortgage programs contain modification.
Loan Modification Basics:
If a person decides to refinance, he or she might also have to pay some fee and costs. But, this fee is paid to the lender, not to the counselor.
To make use of the benefits of the programs offered by the government, a person must ensure that he or she is eligible for it. Some conditions for eligibility are discussed below.
The rules set by the government state that to seek help, the mortgages have to have originated on First of January 2009 or prior. As per the mortgage rules, it is only the first mortgages which qualify for the assistance. If a person has borrowed more cash than the value of the house, he or she is not eligible for the government mortgage help. Also, if the house is the primary residence of the borrower, he or she may not be eligible for the refinancing option. The program makes use of the money gathered in tax to assist the homeowner. Therefore, as a real estate investor, a person certainly can’t make use of the taxpayer’s money to bail out him or herself.
Basically, government aid can only be used if homeowners meet the required guidelines.
To speed up the whole process of getting a loan and notify the homeowners, the state is making efforts to offer the info online. For example, webinar has become a very popular tool to explain government mortgage help options. Internet is a very convenient option, as it’s an all-encompassing technology today. These sessions that are designed to instruct homeowners about the eligibility criteria for various different programs takes about two hours.
The programs offered by the government are a ray of light for homeowners. Under a rough recessionary time, the government mortgage help programs are a much-required relief. By tendering incentives to banks and other financial institutions, these programs aim to generate an appropriate environment for modifications of loan. But, there are certain criteria a person needs to fulfill to qualify.
You will learn all about the Government Mortgage Help Program and how this mortgage program is helping homebuyers make their dreams come true.
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Fierce competition amongst mortgage lenders in recent years has brought about great news for the consumer – The Banks & Building Societies scrapping for business has only resulted in a greater depth of choice and value, for nearly every type of borrower, from those looking to obtain a mortgage for the first time through to those looking to remortgage their existing one.
In todays market, the traditional one size fits all type of mortgage has long disappeared – individual borrowers now have individual requirements and objectives, not to mention individual credit backgrounds too! It is true to say that regardless of your credit history or personal circumstances, there are mortgage products to suit nearly every type of borrower.
If your mortgage requirements are less than conventional, you may experience difficulties securing mortgage finance through the usual channels, by way of approaching the High Street Banks and Building Societies. Traditional High Street lenders have long been the preserve of those borrowers with impeccable credit records – many of these lenders will be extremely anxious to deviate from their ideal customer profile. In many cases where a borrower has a blemished credit history, an initial computerised credit scoring system will result in an application refusal.
There are a now a huge selection of specialist/sub-prime mortgage lenders, many of whom that are prepared to consider most types of mortgage application – from those with the most severe of credit records, to those self employed borrowers with little or no proof of income. In many instances, a borrower will find themselves being redirected to the world of specialist lending after having been turned away by a High Street Bank or Building society for whatever reason. These types of specialist lenders, once regarded as a niche market, have become widely recognised throughout the mortgage industry and provide an increasing important role.
Many specialist/sub-prime mortgage lenders may only be accessed through an intermediary such as a mortgage broker, Independent Financial advisor or mortgage network – Customers must first go via these channels in order to access many of these lenders mortgage products.
Self Employed Mortgages
Self employed borrowers have always been treated differently from their employed counterparts. They have always been penalised for their status in the past, usually in the form of higher interest rates, or an interest rate loading. Self employed borrowers are still today perceived by many Banks & Building Societies as a higher lending risk unless you are able to provide backup of your income in form of two or three years of accounts and six months of bank statements.
There are many specialist lenders who recognise the sheer volume of self employed individuals in the workforce, well over four million and thus make a greater effort in accommodating the borrowing needs of such individuals. They may not offer the lowest rates on the market however their mortgages are still competitively priced and can offer greater degrees of flexibility too.
Buy To Let Mortgages
Buy to let remortgage products have long been the preserve of the specialist lender. The buy to let market has attracted a huge number of landlords in recent years as escalating house prices and a greater need for low risk investment has made property a very viable option in which to invest in. Many of the mainstream lenders have since jumped on the buy to let bandwagon however it is worth considering that specialist lenders often have more experience of the buy to let market.
Approaching a mortgage broker can often be a great place to start in researching your specialist lending needs. As previously mentioned many of the leading specialist lenders are only available through an intermediary however most mortgage brokers will have access to a wide variety of these different lenders. A mortgage broker may charge you a fee for there services however this can at times be negotiated in light of the fact that most will also receive a commission from the lender on completion of your mortgage application.
You will also notice when doing your research that most of the specialist lenders are in fact lending arms of the major mainstream Banks & Building Societies.
James Copper writes on all areas of finance. He works for Commercial Finance Specialists who offer information on Commercial Finance.