The government provided incentive to the home mortgage lenders through home affordable
modification plan which also in turn helps the borrowers of the home mortgages to pay lower and escape foreclosure. Before the introduction of home affordable modification program the home owners were struggling to make interest payments because when they were advanced the home loans interest rates were relatively lower and it was easier making low interest payments. But now in the present era of skyrocketing interest rates it is very difficult to keep up with the monthly payments with no job security and meager income for those who are few of those employed.
Home affordable modification program has its own home affordable modification guidelines which outline the requirements for availing this plan:
The home owner must reside in house for home affordable modification program application
The property shall not be used for profit seeking or commercial purposes
The mortgage balance must be under $729750 for a single family home.
For a home owner to be able to avail this plan they have to show that the monthly expense exceed by more than 31% of the gross monthly income.
The documentation of the information related to salary and expenses would provide proof through hard evidence that the home owner is unable to afford the home mortgage.
The HAMP program helps the home owners in making the home mortgage affordable without having to refinance the mortgage. As the name implies it requires modification of the existing home mortgage plan. The modification is applied to the duration of the loan, the interest being paid on the home loan and also the terms and conditions of the loan. All these measures are taking to lower the financial burden off the shoulders of the home owners.
The borrowers dont realize it but even a difference of one or two percent in the interest rate can save thousands of dollars of the home owners. Because when the savings are accumulated at the end of the duration of the mortgage the amount sums up to hundreds or thousands. The duration of the loan can be extended to as long as 40 years. The extended loan time means that every month the borrower has to make low interest payments. With low payments more money is saved and the credit scores of borrowers are also improved so that in the future they may be able to avail reasonable rates.