Real Estate
Do I Qualify For Loan Modification?
February 26, 2010 by Robert Smith · Leave a Comment
The economy of the United States is currently in a state of near crisis. One result of this economic crunch is the appearance of loan modifications. Due primarily to the current recession, there are currently almost six million homeowners facing foreclosure.
In fact, consumers have also reduced their spending largely. Experts have determined that the root cause of recession can lead to more such crunches in the future.
How The Government Plans To Help:
President Obama has designed a well-analyzed and well-organized economic stimulus plan which include loan modification. This plan will produce a great stimulus for the economy if it is applied in an appropriate way to the home market system.
The loan-to-value (LTV) ratios are so high that many homeowners can not take advantage of the historically low interest rates because they don’t qualify for a refinance loan, and the Obama loan modification plan recognizes this.
Most lenders want to see an LTV of 80% or lower before they consider a loan modification plan, that is, homeowners must owe no more than 80% of the current value of their property.
The goal of Obama’s Home Mortgage Plan is to see that every person has access to a fixed-rate 30 year mortgage, and that fixed rate of interest should be only 4.5%. Furthermore, the plan aims to allow all current homeowners the opportunity to refinance at the same low rate of 4.5%.
Unlike a refinance, a loan modification is not a new loan. Instead, it is simply a modification to the terms of the existing loan. To encourage lenders to participate in the loan modification process, the government is offering them several incentives. We should briefly examine of these.
Some of the benefits of The Obama Loan Modification Plan to the Economy are stated below:
1. You can save more money by receiving a reduction in the interest rate of your loan if you qualify for a loan modification plan.
2. The program even offers cash incentives with the objective to entice the borrowers to choose the program.
3) $1000 is assured for the original loan modification by this programs, and an additional $1000 for three years as well. Of course, this benefits are contingent on the borrower making timely loan payments and not defaulting on the loan.
4. In addition, the program aims to minimize the interest charges and increase the loan term, if the coveted percentage of the total monthly income is not fulfilled.
In order to qualify for this new loan modification plan, you will of course need to meet certain criteria. One critical condition that must be met is that the loan should not date back beyond January 1st 2009, and you must be the prime resident.
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categories: home, debt, loans
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