Modifying mortgage loans under the Obama housing plan has become the most effective financial tool for homeowners with troubled mortgages. In fact, it's about the only way a person who is experiencing financial difficulties can get a mortgage refinanced. However, many don't understand what loan modification is, how you go about qualifying for it and what it can do to help them in their predicament.
Loan modification is designed for those who have troubled mortgages due to a personal hardship and are caught in a situation where their mortgage rates are too high or their home values have declined due to the housing slump. Mortgage modifications reduce the interest rate down to a level where the mortgage payment doesn't exceed 31% of a family's income. Interest rates can be reduced to as low as 2% and if that isn't sufficient, the term of the loan can be extended up to 40 years.
The fundamental feature of a loan modification is that it's designed to help someone who has had a hardship. To qualify for relief under the Obama housing plan, one needs to substantiate a hardship that has impacted their ability to service a loan. This can include losing one's job, having income reduced due to a cut in hours, death of the primary income earner in a household, military duty and other such events. Once the hardship is accepted, it's much easier to qualify for the relief.
Those who have applied have experienced a process that can be tedious and complex. It's probably very helpful to solicit the help of a firm or an attorney who is experienced in modifying mortgage loans. They understand the process, can be detached from the emotional issue of dealing with one's home and help the applicant avoid pitfalls and mistakes. The Obama housing plan is a great idea, but like many great ideas it has to be properly implemented. If there's a problem, that's where it is and that's also why it's so important to have expert help working for your best interests when you apply.
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