Are You Thinking Of A Mortgage Reduction Option?

Chances are you've heard about the Obama mortgage reduction program. It is formally termed as the Principal Reduction Alternative (PRA).

What Is A Mortgage Reduction Program?

It is when a lender agrees to minimize the principal balance you owe on your mortgage.

Why Would You Need This Alternative?

If your home has dropped in value to the level where it is worth less than you owe. The reduction on your principal would bring your payments down and inline with the present value of your home. Instead of missing payments and requiring home foreclosure help, you may try to lower your balance and reduce your payments to something convenient.

Many years ago, if trying to find a home loan, anyone was offered exactly the same thing. In recent times however what constitutes the standard mortgage loan product has changed a lot.

HAMP or Home Affordable Modification Program

It is a loan modification program that President Obama introduced in an attempt to help the United States economy by assisting homeowners with their mortgages. The idea being, if homeowners could be helped economically to avoid more foreclosures this of course would have a drop down effect on the economy. So, foreclosure help was a key fact of this system.

The type of house loan you will get may be determined by the credit rating that you have got. When it is a bad one, then any mortgage loan quote will tell that since undoubtedly, you will have to pay substantial mortgage rates.

Putting more money back in homeowners pockets would enable them to make their monthly mortgage payments. Plus with more disposable income available, they would spend more money thereby giving the economy a crucial boost.

In addition to offering loan modifications HAMP also demands lenders to evaluate homeowners on a case by case basis to find out if they qualify for the PRA program.

Sounds Cool Right?

Well, the challenge is while lenders are required to automatically assess whether or not a homeowner is eligible for PRA, there is no incentive to do so. At present, the U.S. Government subsidizes every approved loan modification. This denotes if a lender approves your loan modification, the lender will get $4,000 for doing that.

Understand and learn more in relation to the federal loan modification strategy and to successfully qualify for the government program. The economy may not be in good shape and this one of the programs where one can get better refinancing loan for your home loan.

But with the mortgage reduction program there are no financial incentives. As a result the number of PRA approvals are quite low. That's not to say it's unlikely to be approved. It just indicates it will require a lot of "fight" on your part. No one wants to face home foreclosure, so you need to do your research as much as you can to be prepared.

But with the mortgage reduction program there are no financial incentives. Consequently the rate of PRA approvals are very low. That's not to say it's unlikely to be approved. It just means it will need considerable "fight" on your part.

Benefits

The advantages are obvious. More money in your pocket and you could save your home from foreclosure.

What Are The Prerequisites?

You must be"underwater" on your mortgage which means you owe more than your home is worth

Fannie Mae or Freddie Mac may not own or guarantee your mortgage.

Must establish financial hardship

Must actually live in the home you want a loan modification for.

Must have received your mortgage on or before January 1, 2009.

You should be able to provide proof that your income will enable you to make the modified payments.

Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly earnings.

You owe as much as $729,750 on your 1st mortgage.

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If All Of This Seems A Bit Complicated...

That's because it is. Applying for a loan modification is like taking on a second job. The time and documents gathering is more than a notion. Conversely, you've got to do whatever is necessary to save your home. If you're not acquainted with how loan modifications work you'll need to spend time researching and familiarizing yourself with particular terms.

Making investments in real estate is not a walk in the park. It has become the most productive investment option over the years, but quite complicated than investing in bonds or stocks.

You will need a detailed understanding of the process when it comes time to work out with your lender.

Especially if you're hoping to take advantage of the mortgage reduction program. If you're not feeling completely confident. Consider the services of a reputable experienced loan modification company. They can save you valuable time and possibly your home.

Read More About The Federal Government Loan Modification Plan
Understand and learn more in relation to the federal loan modification strategy and to successfully qualify for the government program. The economy may not be in good shape and this one of the programs where one can get better refinancing loan for your home loan.

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