Yes, it’s true. Due to the economy and the general decrease in income in the American household, the feds have a program that can cut your mortgage rate to 2% in order to make your payment 31% of your gross income. However, it seems that qualifying for this program will take some pretty fancy maneuvering. Here are some tips to give you a general idea if you can qualify, and what to do to get the loan to the closed and funded status.
The Making Home Affordable program is the newest of the loan modification programs. The mortgages have to belong to Freddie Mac or Fannie Mae. These are the two large mortgage loan holders the government took over about a year ago. They are cutting rates to as low as 2% in an attempt to reduce your payments to no more than 31% of the homeowners gross income.
First, you need to know if one of these two agencies owns your mortgage. Even if you got your home loan at a bank, it may be owned by one of these lenders now. These two large companies buy loans from commercial banks; they own a major portion of the nation’s home loans.
To find out if Freddie or Fannie owns your mortgage, you will need to visit both the lenders web sites and fill in the requested information about your residence and yourself. Remember, you may not know if either of the two agencies owns your loan. The bank that you received the loan from may still be servicing the loan even though Freddie or Fannie may own the loan. So you need to check no matter what you think. If they don’t own your mortgage, well, you don’t qualify.
For a rough idea if your mortgage amount will qualify for the program, divide your mortgage payment by your gross income, this will give your the percent the payment is of your gross income. Do not forget to add interest, insurance, taxes, and principal together for the entire house payment.
You may have taken out an adjustable rate mortgage that has skyrocketed in interest and the payment has gotten almost twice what it was in the beginning. The second would be that one of the two of you as income earners has either lost their job or has had hours worked cut back considerably.
There is a trick to qualifying, you have to convince the bank that your are in dire straights but with the help of the mortgage payment reduction, you will be stable financially. You will not qualify with a large savings account, this is the biggest dis qualifier. You cannot spend 45% of your income on private schools or golf club dues.
You cannot be in to bad of position ether, for example, you won’t qualify on unemployment income that is considered a 6 month income, and the requirement of employment is a strong chance of continued employment for 9 months or more.
You get the picture, the window for qualification is small, and one Lender stated “it would not hurt to go delinquent by 1 or 2 months, I feel terrible saying that but that will get the banks attention”.
You can find help with the qualification process of this program through HUD and some other non=profit organizations on line.
It’s a great time to be shopping for a house with exceptional mortgage loan rates available from reputable credit unions. For extra financial security, have a look at fixed GIC rate products.