Do I Qualify For Loan Modification?
The economy of the United States is currently in a state of near crisis. One result of this economic crunch is the appearance of loan modifications. Due primarily to the current recession, there are currently almost six million homeowners facing foreclosure.
As a matter fact, consumer spending is down across the in all areas of the economic landscape. Experts that have analyzed the root causes of recession are predicting more rough economic times are ahead.
How The Government Plans To Help:
President Obama has designed a well-analyzed and well-organized economic stimulus plan which include loan modification. This plan will produce a great stimulus for the economy if it is applied in an appropriate way to the home market system.
The Obama loan modification plan recognizes that many homeowners cannot take advantage of historically low interest rates, because the loan-to-value (LTV) ratios are too high for them to qualify for a refinance loan.
Most lenders want to see an LTV of 80% or lower before they consider a loan modification plan, that is, homeowners must owe no more than 80% of the current value of their property.
According to Obama’s Home Mortgage Plan, a person should have access a 30 year fixed rate mortgage with an interest rate of 4.5%. Plus, this plan states that refinancing should be made available to current homeowners at a 4.5% interest rate.
A loan modification, unlike a refinance is not a new loan. Rather, it is a change in the terms of an existing loan. The government is even providing incentives for lenders to participate in the loan modification process. The incentives are as follows:
Some of the benefits of The Obama Loan Modification Plan to the Economy are stated below:
1. Reduction in the interest rate after qualifying for a loan modification plan will help people to save more money.
2) To encourage borrowers to choose this program, the plan is to offer them cash incentives.
3. The program will pay the borrower $1000 for the original loan modification, and an additional $1000 each year for three years. However, in order to qualify for this money, you have to pay your dues on time without any defaults.
Furthermore, if the coveted percentage of the total monthly income remains unfulfilled, the program aims to increase the loan term and minimize the interest charges.
However, you will have to fulfill certain criteria to qualify for this new loan modification plan. One pivotal criterion is that you have to be the prime resident and the loan should not date back beyond January 1st 2009.
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