There are various mortgage loan modification programs available to homeowners who are struggling to meet their mortgage repayments. However having a wide variety of choices can lead to you becoming confused and overwhelmed with all the information you have to take on board. Therefore in this article i would like to introduce you to the 3 main mortgage loan modification programs.
1) The Fannie Mae streamlined modification program. This mortgage loan modification program is openly available to those of you who have a mortgage that is either serviced or owned by Fannie Mae. I would hazard a guess that the majority of home loans fall into this category. Your mortgage payments will be lowered to 38% of your monthly income. This is done by either lowering your interest rate to as low as 3% or extending the term of your loan. Depending on how bad your circumstances are, you may even have some of your principal balance reduced.
2) The next program is the FHA partial claim mortgage loan modification. This will be available to you if your home is insured by the FHA. Usually if you are in arrears on your loan, another “deferred” loan is put in place to pay for these arrears. It is not until you decide to sell or refinance your home that you will have to make any payments to this new deferred loan.
3) Many individual lenders now offer mortgage loan modifications. In conjunction with the government, these lenders have agreed to lower your monthly mortgage repayments to a maximum of 31% of your monthly income. Once again this is achieved by either lowering your interest rate, extending the term of your mortgage or by reducing some of your principal balance. Although this is a government backed scheme, individual lenders may publish their own guidelines for approval to their mortgage loan modification program.