Millions of people potentially face the possibility of foreclosure in the current economic climate. The government assistance plan, called the Homeowner Affordability and Stability Plan (HASP), provides funds to help lending institutions assist homeowners with a mortgage modification. Two of the reasons why you should consider modifying your mortgage loan include the inability to refinance at a lower interest rate and the possibility of defaulting on loan payments because of an "exotic" mortgage.
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Currently, many homeowners find themselves with a decreased in salary and increased living expenses. With unemployment at historically high levels, some people are facing no income at all. If you find yourself in any of those situations, a lower monthly mortgage payment would likely be helpful. Refinancing at the current interest rates would lower that monthly payment, but banks are unwilling to do that when home values have dropped so significantly. With the HASP, the government provides funds to lending institutions so that they can allow homeowners to refinance at lower interest rates, even when the current value of their home is less than the amount they owe on the mortgage.
Some lenders were giving what the government is calling "exotic" mortgages. Exotic mortgages are not the typical fixed rate, 15- or 30-year mortgages. They include interest only loans, sub-prime loans, and loans with "hidden" fees. Homeowners with these kinds of mortgages are considered at-risk homeowners. Because of the fact that the terms of these mortgages are not affordable and the fact that the home is not able to at current prices, foreclosure is an imminent possibility. HASP provides backing so that a mortgage modification makes the monthly payments more affordable for the homeowner and they can avoid foreclosure.
Most lenders modify home loan without governmental assistance. Although the HASP is intentioned well, there are a lot of rules. Many homeowners are complaining that they are being left out of the program for no good reason.
Lender modification most of the time are better term wise than governmental backed modifications. Lenders usually incorporate a variety of options that will decrease your monthly mortgage payment. That may include lower interest rates, extension of the life of the loan, grace period, elimination of certain fees, or a combination of available options.
Still not all qualify, and all won't be approved. No one can make the lender nullify or modify your loan. But if you know what to do, you increase your chances significantly. You will need to do research and learn the process in and out.
One helpful resource that many people get is a loan modification all in one kit. One such kit is 60 minute loan modification; it incorporates everything you need to know in one place. The kit includes step by step guide on how to write a hardship letter, important information about all of the major lenders, vocabulary and terms you need to know, and which many people find very useful, recorded conversations between homeowners and lender reprenstatives so that you can learn what to say and more importantly what not to say. The kit was created by a real estate professional, who has modified five of his home loans, and numerous loans of his clients. The kit is a must have if you are serous about modifying your loan.
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