The Government has now come up with two plans to help people who have missed payments on their mortgage and are struggling. In this article i wish to introduce you to the one that is called a Loan Modification plan. To qualify, you need to meet the following criteria:-
- Your original mortgage loan cannot be greater than $729,000
- Your mortgage must have completed prior to January 1st 2009
- You will be required to provide proof of your income and expenditure, through payslips, tax returns and bank statements
- If your total debts are in excess of 55% of your income, you have to agree to visit credit counselling
- Finally, you must be living in the mortgaged property and will be required to write a letter in your own handwriting stating that you are in financial hardship
So what can your lender do for you in this situation?
- They can lower your monthly repayments to approximately a third of your monthly income.
- Interest has been known to be dropped to as low as 2%.
- You don't need to pay any fees for the modification as these are covered by the government
- The government are able to reduce your balance by up to $5000 over 5 years as long as you make your payments on time
- Your rate is reduced for the period of 5 years, so you may have to pay more after this period
- You are only ever allowed one modification
Loan Modification Companies have been reported to charge anywhere from $1500 - $5000 to help you with this process. If you don't have that kind of "spare" cash lying around, you will need to complete a "Do-It-Yourself" Loan Modification.