Know Government Mortgage Refinance And Loan Modification Program Criteria

The process by which the original loan terms are restructured to bring down monthly payments is called loan modification. Loan terms as the interest rate, duration and monthly payments are reworked with the approval of the lender. Most homeowners use loan modifications plan when they have financial difficulties due to which they are unable to keep up with the monthly payments. This method which was a cake walk earlier for most is now a more stringent procedure and one needs professional help to avail mortgage refinance loans or loan modification.

The modification and refinance options are the key objectives of the Home Affordable Refinance Program (HAMP) launched by President Obama to help troubled home owners and mortgage loan defaulters to keep their homes and avoid foreclosure. There are two parts to the program. The mortgage refinance loans are advisable for those who are unable to make use of lower interest rates due to the property slump. To become eligible one has to be regular in monthly payments and the credit history has to be in order to support regular payments. It is for those with good credit scores. The qualifier gets the benefit of fixed interest rate over the full loan term and especially helps those who are having an adjustable rate mortgage. If the individual has poor credit scores they could get qualified for bad credit mortgage refinance loans.

The qualifying criteria for HARP mortgage refinance option

• The present mortgage loan has to be Freddie Mac or Fannie May owned or guaranteed.


• The outstanding amount should not exceed 125 % of the market value of the house.


• The payments should be current and no late payments over 30 days are accepted.


• The applicant should be capable of regular payments on mortgage refinance loans.


• The new terms should lead to improvement in the stability of the existing loan.

The other part or program is loan modifications under the HAMP (Home Affordable Modification Program). Those who have been delinquent in payments or don't have Freddie ma or Fannie May loans or with not so good credit history can avail government loan modification and work to improvement.

The qualifying criteria

• The home should be owned and occupied.


• The amount should be below $ 729,750 for a single unit home.


• The gross monthly income should be more than 31% in comparison to the modified loan monthly payments.


• Mortgages submitted for loan modification problems solution, should be have been taken on or before January 2009.


• Detailed documentation and financial hardship letter is necessary.

The two options of the government loan modification programs provide an ideal opportunity to avoid foreclosure and get benefits of the modified terms to repay the mortgage easily and efficiently.