Do I Qualify For Loan Modification?
The U.S. economy is currently facing a severe economic crunch, due to which loan modification has appeared. Nearly six million homeowners are facing home foreclosures, primarily due to the current recession.
As a matter fact, consumer spending is down across the in all areas of the economic landscape. Experts that have analyzed the root causes of recession are predicting more rough economic times are ahead.
How The Government Plans To Help:
To combat this situation, President Obama has formulated a well-analyzed and well-organized economic stimulus plan for loan modification that will generate a significant stimulus to the economy if appropriately applied in the home market system.
This plan understands that homeowners are not able to refinance their loans and take advantage of the now historically low interest rates, because the loan-to-value (LTV) ratios are too high.
The majority of mortgage lenders will not consider loan modification plans unless there is a LTV of 80% of lower. This means that the homeowner has to owe less than 80% of their current property value.
The Obama’s Home Mortgage Plan says that every person should receive access to a 30 years fixed rate mortgage with an interest rate of only 4.5%. In addition, refinancing would be made available to current homeowners at an interest rate of 4.5%.
The thing to remember is that loan modification is not a new loan, like refinancing would be. Instead, loan modification is simply a change in the terms of the current loan. In order to have more lender participate, the government is providing incentives to the lender that participate in the loan modification process. It is surprising what some of these incentive are.
Some of the benefits of The Obama Loan Modification Plan to the Economy are stated below:
1. You can save more money by receiving a reduction in the interest rate of your loan if you qualify for a loan modification plan.
2. To try to get borrower to try the plan, it offers cash incentives.
3. The program also assures $1000 for the original loan modification along with $1000 additional for three year. But, this is valid only with the condition that you pay your dues on time without defaulting.
Furthermore, if the coveted percentage of the total monthly income remains unfulfilled, the program aims to increase the loan term and minimize the interest charges.
However, you will have to fulfill certain criteria to qualify for this new loan modification plan. One pivotal criterion is that you have to be the prime resident and the loan should not date back beyond January 1st 2009.
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