Will Loan Modification Plans Work For You?
The economy of the United States is currently in a state of near crisis
. One result of this economic crunch is the appearance of loan modifications. Due primarily to the current recession, there are currently almost six million homeowners facing foreclosure.
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:
President Obama has designed a well-analyzed and well-organized economic stimulus plan which include loan modification. This plan will produce a great stimulus for the economy if it is applied in an appropriate way to the home market system.
The Obama loan modification plan recognizes that many homeowners cannot take advantage of historically low interest rates, because the loan-to-value (LTV) ratios are too high for them to qualify for a refinance loan.
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%.
A loan modification, unlike a refinance is not a new loan. Rather, it is a change in the terms of an existing loan. The government is even providing incentives for lenders to participate in the loan modification process. The incentives are as follows:
Stated below are some of the benefits of Obama's Loan Modification Plan For Economic Stimulus:
1) It will help people save more money be reducing their interest rate after they qualify for a loan modification.
2. The program even offers cash incentives with the objective to entice the borrowers to choose the program.
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.
4. If a person does not meat the percentage of total monthly income, the program aims to still minimize the interest charges and increase the loan terms.
In order to qualify for this new loan modification plan, you will of course need to meet certain criteria. One critical condition that must be met is that the loan should not date back beyond January 1st 2009, and you must be the prime resident.
by: Robert Smith.
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