A Fannie Mae loan modification could offer the lower payment you need to stay in your home. The program features some very aggressive terms and is funded by the Treasury Department. It is called Home Affordable Modification or HAMP. This plan is targeted to help millions of struggling borrowers find a solution to avoid foreclosure. Need to know if you qualify and how to apply? Here are some FAQ's to help you get started.
Who qualifies for a Fannie Mae loan modification?
Borrowers must be able to demonstrate an acceptable financial hardship situation. This may due to loss of job or income, medical issues, divorce or separation, military service, interest rate reset on adjustable loan, etc. Do you know how to write an acceptable hardship letter? You must be able to prove your income and be able to prove in black and white that you will be able to afford the new modified mortgage payment, now and in the future. Your lender will ask for a financial statement that details your income and expenses, do you know how to complete this correctly so that it meets the approval criteria? You must live in the home as your primary residence to qualify for the Obama Home Affordable plan. Your loan must have been originated prior to January 1, 2009 and be less than $729,750.
If you can answer yes to the above items, you may be a good candidate for a Fannie Mae loan modification. The plan is standardized and will offer certain loan modification options to qualified borrowers. The goal of the plan is achieve a new monthly payment (including taxes, insurance and homeowners dues if applicable) that equals just 31% of the homeowners gross monthly income. The methods used to arrive at the new payment include:
Reduce interest rate to as low as 2% Extend term to 40 years Deferral of some principal balance-no interest or payments are due on this amount, but it will be due and payable when the home is sold or refinanced. In some cases, some of your principal may be forgiven.
How do you apply for a Fannie Mae HAMP loan modification? Check your lenders website to make sure they are participating in the program. You can also call your lender and ask to be considered. Even if you have applied before or been declined in the past, you are entitled to be considered for this plan. Make sure you that are prepared ahead of time so that you will be able to complete the application paperwork correctly. Remember, you must be able to demonstrate that you meet the eligibility requirements.
The Fannie Mae loan modification program uses a standard 4 step formula to determine who qualifies. You can learn this very same formula and use it to fine tune your own application. The Loan Mod Quick APP software will automatically calculate your debt ratio, target payment and disposable income. Take advantage of this helpful tool to avoid mistakes and prepare an accurate application. Remember, you must be able to prove on your application that you meet the eligibility criteria. So take the time now to learn how to improve your chances of getting approved. This could be the second chance you need, make sure you do it right.
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