Six Things To Know About Making Home Affordable

By MortgageCreditProblems.com Columnist
Mortgage Credit Problems Columnist

You've probably heard about the government's Making Home Affordable program, part of the administration's plan to minimize foreclosures. These opportunities won't last forever, so if you're having trouble making your mortgage payments, investigate now to see if you qualify for refinancing or a loan modification through the program.

Here are 6 things to know before you get started:

1. Your mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac to refinance through the program. Ask your mortgage servicer, or contact Fannie Mae, 1-800-7FANNIE, and Freddie Mac, 1-800-FREDDIE, directly. You also must be current on your mortgage--have made no payments more than 30 days late in the last year--and your first mortgage must not exceed 125 percent of your home's value.

2. If you're mortgage is not held by Fannie Mae or Freddie Mac, you may be eligible for a loan modification to make your payments more affordable--even if you're already behind on your mortgage. To qualify, your principle must be equal to or less than $729,750 for a one-unit home, the loan must have been originated on or before Jan. 1, 2009, your monthly mortgage payment must be greater than 31% of your pre-tax monthly income, and you must be able to document that a financial hardship has made your mortgage unaffordable.

3. Act quickly--the refinance program expires Jan. 10, 2010. Get a Home Affordable Refinance application from your lender or any other lender approved to do business with Fannie Mae or Freddie Mac. The Home Affordable Modification Program extends until Dec. 31, 2012, but don't put off getting help if you're having trouble.

4. Gather the following documentation to streamline the application process: information about the monthly gross income of all the borrowers on the loan, your most recent income tax return, information about any junior lien mortgage, account balances and minimum monthly payments on your credit cards, and account balances and monthly payments on your other debts. For the modification program, you'll also need a letter describing why your mortgage has become unaffordable.

5. Get more information at Making Home Affordable, and contact a U.S Housing and Urban Development-approved housing counselor at 1-888-995-HOPE (4673) for free counseling to understand your options.

6. Don't give up if you're not eligible for the government program. Check out lenders' best mortgage refinance rates. You may be eligible for a lower mortgage rate now if you have improved bad credit.

Sources:

http://www.makinghomeaffordable.gov/borrower-faqs.html#a7

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/13/AR2009081302335.html?hpid=moreheadlines

http://www.miamiherald.com/business/story/1207496.html

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