Need Mortgage Refinance

Hardship Letter and Key Questions to Evaluate

Many people are finding it difficult to explain why or how they came to be in a position of struggling to meet their mortgage payments, problem is if you are applying for a loan modification then this part of the requirement and you have to provide a reasonable and honest explanation for why you are struggling.

You will find a template for putting together a hardship letter in one of the previous posts on this site called Hardship letter template for a loan modification request.

For further information I have included a link at the top of the page to an article that explains what information you need to add to a hardship letter when explaining how you came to be in financial difficulty. The article is very well written and tells you exactly which questions you need to answer with respect to explaining your difficulties from a lenders perspective, which is of course the perspective you need to understand and satisfy.

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The first thing your loan servicer will do to see if you are eligible for the loan modification program is establish if the loan you have meets the terms for loan modification and if it does:

They will ask about your current income, what assets you have, if any, and any ongoing expenses. What they want to know is whether you will be able to make any new payments that will be due after loan modification by understanding your specific circumstances. Anything you tell them will eventually need to be supported by documented evidence i.e. tax returns, pay stubs etc.

They will also need to establish that your monthly first lien mortgage repayment does not exceed 31% of your gross monthly income.

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If you are having trouble keeping up with your home loan mortgage repayments you are likely to receive a letter from your lender asking you to get in touch.

If you are serious about avoiding foreclosure the worst thing you can do is ignore the letters and the problem. The more payments you miss the more difficult it will become to resolve the problem and loosing your house will become more likely.

So make sure you contact your home lone mortgage lender as soon as you become aware that you have a problem. There will be options available to you to help you through your financial difficulties and mortgage lenders really do not want your house, they would prefer that any financial problems are resolved. Some of the options are home loan mortgage refinancing and loan modification but there may also be alternative options.

Open and read all correspondence from your lender, apart from anything else the information provided may include suggestions for avoiding foreclosure. You are also likely to have any proposed legal actions against you outlined and you need to be aware of these, not opening your mail cannot be used in your defense or as an excuse if you end up in court.

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Obama’s government has come up with home refinance stimulus package and loan modification programs to help all the needy owners in avoiding foreclosure. This program is designed specifically for all the borrowers who are facing financial hardships as they are not in a condition to repay the loan. The home refinance stimulus package and loan modification would cover as much as 9 million mortgages and the government would spend $75 billion for helping the homeowners.

Obama’s Stimulus Package has 2 main components:

1. Refinance

2. Loan Modification

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With the new incentives for mortgage refinancing and loan modifications coming into existence since Barack Obama signed off on the new rescue plans for homeowners facing difficulty with their mortgages in the wake of the finance industry’s near collapse,  it can be quite confusing as to what is what in the mortgage refinance world.

One thing you should know for sure is that there are differences between the mortgage refinancing program from Obama’s initiative “Making Home Affordable’  and an earlier initiative that came from George Bush  the ‘Hope for Homeowners’ program.

Hope for Homeowners Program

This program is administered by the Federal Housing Administration and its key features are as follows: (more…)

If you are looking to get a home mortgage loan modification that allows you to take advantage of Obama’s new stimulus package you will need to understand the rules that have been applied to know whether you actually qualify for this type of loan modification.

The first general rule is that you should be struggling to make your mortgage payments if you are meeting your mortgage payments comfortably then you are not going to qualify. So what exactly do the stimulus package rules say for loan modifications: -

• You have to be in residence of a single family home
• Your total repayments including capital repayments, interest, tax and insurance must be more than 31% of your gross income (from March 2008)
• Your mortgage balance must not exceed $729,750 for a single unit but for multiple units the amount can be up to $1,403,400 for the maximum 4 units
• Your mortgage pre-dates the 1st of January 2009

What you should also know: -

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We are all well aware of the economic chaos that the whole world seems to be in at the moment and are all sitting on the edge of our seats to see if the new stimulus package that President Barack Obama has championed is going to work in stemming the flow of the foreclosure’s on people’s homes when they have struggled to meet their mortgage repayments.

The Obama new stimulus package amounts to a massive $1 trillion bale out package that offers new loan options, grants and tax credits. So for home owners that are struggling, there is relief in site and it is possible to take a home loan mortgage refinance option to get lower rates of interest or longer repayment periods.

Obama has offered a $1000 incentive to encourage home owners to opt for mortgage refinance or loan modification instead of going for a short sale or foreclosure option.

There are rules that apply to these mortgage refinance deals : -

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