Making the Most of the Downturn in the Housing Market

                                                                                         

In spite of the state of the current economy, rates on home mortgages remain low. This may be an excellent time to investigate your options regarding the reduction of your monthly mortgage payment.

For the homeowner with a strong credit rating and stable home value, the options are clear, traditional, and relatively straightforward. Now is the time to compare mortgage interest rates to your current rate, and determine whether you would benefit from traditional refinancing.

New programs from the Federal Government open a variety of options to homeowners in less optimal situations as well. Efforts to alleviate the economic stress on homeowners caused by the burst in the housing bubble, these programs provide incentives and guidelines to lenders to help consumers respond to recent changes in the housing market.

The Home Affordable refinance might be an option if you have a good payment history with your mortgage company, but, due to the decline in home values, you are above the 80% loan to value ratio necessary for a traditional refinance. Under this program, you might be able to take advantage of current low interest rates, or refinance adjustable rate mortgages into a fixed rate loan.

If your mortgage payment is stretching the edges of your budget, the Home Affordable Modification might be for you. The goal of this program is to bring mortgage payments to no more than 31% of the borrower’s income. For qualified homeowners, this is accomplished through a specific series of steps, including reduction of interest rate, extension of the loan term, and forbearance, or forgiveness of a part of the loan’s principal. The Home Affordable Modification, available under first mortgages on owner occupied properties, is available to borrowers at least 60 days delinquent in their mortgage payments, or at risk of imminent default under their first mortgage. This program provides additional incentives to lenders for modification of loans to borrowers who have not yet missed payments.

If you are one of the many homeowners that took on a second mortgage during the recent housing boom, the Making Home Affordable Second Lien Program may suit your needs. The Second Lien Program works in tandem with the Home Affordable Modification Program, modifying the terms of second mortgages in order to bring your total monthly mortgage payment into a more affordable range in the course of the modification of your first mortgage. Both the Home Affordable Modification and the Second Lien Program may be of benefit to you if you have experienced job loss or other hardship.

Finally, the Hope for Homeowners program is another program designed to complement the Home Affordable Modification. If you have missed mortgage payments, or are at risk of imminent default due to hardship, and your loan to value ratio is above 80%, the lender is required to offer the option of a Hope for Homeowners Refinance at the time that the modification is offered. Participation in each program is voluntary for lenders, but the incentive for lenders to participate is substantial.

About the author:
Attorney Matthew Carucci is a Business Planning, Estate Planning and Probate Lawyer in Wilmington, Delaware. Find out more about this article Visit - caruccilaw.com

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