It was good to see that now million of borrowers will get help from Obama's New Loan Modification Program that aims to help them staying in their homes and avoiding foreclosure. Lots of borrowers are still confused that whether this step from the President would help them or not. People are confused that this new refinancing program is for whom? Lots of question still running in their mind. This post is for all those people who are still scratching their head regarding the broad decision made by President Obama.
What is the new Loan Modification Program all about ?
This plan was made keeping in mind two groups of people:
1. People who were unable to qualify for Refinancing though they were able to pay their mortgages on time. This was happening because they owe more on their current home than it was a worth of.
2. People who are at extreme risk level because of high foreclosure.
This new home affordable program plans to allocate around $75 billion for those borrowers so that they can stay in their homes without any added disturbances. The only thing to be kept in mind is that not everybody will qualify for this program. Then Who will Qualify?
1. A person should live in the same house which must be his/her primary residence.
2. Second Mortgages should not be included under this plan at any cost.
3. A person should prove his income.
4. The current house payment should be equal to or more than 31 % of a person's Gross Monthly Income.
5. There should be no charge to apply for free loan modification program.
How to apply for New Loan Modification Program?
The most important thing to do here is to complete the paper work as soon as possible and completing the required loan modification documents . Secondly, the borrower should prove that he/she is passing by financial crisis, they have to submit their income and expenses details completely.
Which banks are helping with this new Loan Modification Program?
It is good to see that the Federal Government is offering monetary incentives to the lenders because this program is entirely on the voluntary basis. As a result of this most banks will offer this plan to their qualified borrowers.
How will the new Affordable Plan work?
With new interest rate and payment this program will run on 3 months trial period. If the payments are made on time the lenders will automatically convert the plan to permanent modification agreement. After this the plan will continue till 5 years at a very low interest rate and payments.
During this 5 year period homeowners will receive $ 1000 per year which is directly applied with the loan balance. As soon as the 5th year is completed the rate is bound to go up by 1% until it reaches to the maximum point which had been signed in the agreement. It is important for the homeowners to learn about their debt ratio.
What are the important features of new Loan Modification Program?
This new program is not at all similar to loans. The best part is government is paying incentives to the lenders who are participating in this program. Previously no new loan was written that was more than 80%, now with the drop of prices these changes are normal. Many people can easily take advantage of current low mortgage interest rates.
I am ending this post by stating that though I have provided my readers with information regarding qualification of new loan modification program, that doesn't mean that I am favoring or I am against this program. I just believe that it will not help us to come out of the mess in which we are right now. This post is written only to provide general information to you and so that EACH one of you reading this can come with your own conclusions.