Are you in or facing foreclosure? Has the market value of your home decreased and you’re now upside down? These may be good opportunities to do a loan modification on your mortgage. A “loan mod” as it is sometimes called, is the process of changing the terms of your original mortgage with approval from the lender, and with new laws from the federal government, is not credit based. Losing your job, going from a two income family to a one income family (due to divorce or death of a spouse), being on an adjustable rate mortgage (ARM) where your payments have gone up due to the ARM, or the market value of your home has decreased and you are upside down; these are examples of permanent changes in your finances and may qualify you for a loan modification.
As forementioned, the process’ goal is to modify the original terms of a mortgage agreed upon by the borrower and lender, and may reduce interest rate, reduce monthly payment, modify the length of the loan, or reduce the amount of the mortgage, and many times will include any arrearage placed at the back of your loan. The process starts by you, the homeowner, calling the lender and requesting to do a loan modification.
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With the dip in the US economy, it was almost certain that the housing market would be seriously impacted as well. Sales of new homes have just about come to a standstill. Not to mention the growing number of people that owned a home but are now unable to afford their mortgages due to the other effects the nation’s economy has had on people.
Some have outright lost their jobs and have been unable to find new employment. Others have found new jobs, but they do not pay as much as their old ones. This does not take into consideration the increase in the cost of living or the chances that some other financially devastating thing happens in your life such as a major illness or the loss of a loved one. Just one of these things is bad news but the combination of things has hit homeowners hard. If you are in this tight financial situation and you are seriously having difficulties keeping up with your mortgage, then it’s time for you to consider a loan modification with Obama’s 2% loan modification program. It is called a 2% program because this is the low rate the modified loan can be fixed at.
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President Obama’s Mortgage Modification Plan has been operational since February 2009. It was part of the Stimulus Bill, with its goal being to help the sagging real estate market. It had three parts: First Time Home Buyer’s Stimulus, Refinance, and Loan Modification. It has been established that the first year of its operation has seen positive results.
Home sales have responded with some growth, which has been credited partially to the First Time Home Buyer’s Stimulus. 4 million people have refinanced their homes to save $7 billion a year. Over a million people have received loan modifications, reducing their monthly payments by an average of over $500.00 a month. The real estate market has stabilized somewhat, and interest rates are down.
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