Struggling homeowners who are unable to meet monthly payments try to consider one option – a mortgage loan modification program. Although the idea of having your loan term modified is engaging, many are still confused on which program would be best for them. With several programs and advertisements from different lenders, independent programs, and government sponsored programs, homeowners may be overwhelmed and completely bewildered. Following are some explanations on loan modifications which are available:
- Fannie Mae SMP (streamlined modification program) is available only to clients who now have a loan serviced or owned by Fannie Mae. Most loans which appeals to its clients are included in this category. In this mortgage loan modification program, the payments of borrowers are decreased until it reaches 38% of their present gross income. Fannie Mae does this by reducing the interest rates, probably to 3%, which as a result extends the term of payment for the loan and maintains the principal loan value. You can learn more about specific qualifications in this loan modification program.
- The mortgage loan modification program of FHA Partial Claim is available only to homeowners who have loans under the insurance of FHA. In cases of back payments on the loan, there is what they call a “silent” delayed loan that pays those debts to keep the loan current. Homeowners do not have to pay mortgages or interests under this program, until the home is either refinanced or sold.
- There are also individual lenders who offer mortgage loan modification plans. Their goal is to reduce the amount of monthly payments which would be affordable for their qualified borrowers. They can achieve this by either, increasing the length of term, forbearance on one of the loan’s portion, lowering interest rates, or sometimes, a combination of these three. Independent lenders also have their own qualifications for potential borrowers, and it is worthwhile to learn and understand more about their requirements.
Because of today’s economic crisis, many US homeowners are having difficulties meeting their mortgage payments, and some are at risk of default. There is available help for everyone, but you should know where and how to acquire it. Before getting a loan modification you should first understand the correct steps, guidelines and requirements of the program before applying for it. This will greatly help you in passing the approval process quickly. If you are nearing dangers of bankruptcy you should not lose hope. Billions of dollars are waiting to help you; you just need to know where to look.