Yes, it’s true. Due to the economy and the general decrease in income in the American household, the feds have a program that can cut your mortgage rate to 2% in order to make your payment 31% of your gross income. However, it seems that qualifying for this program will take some pretty fancy maneuvering. Here are some tips to give you a general idea if you can qualify, and what to do to get the loan to the closed and funded status.
The Making Home Affordable program is what we are talking about here. First, this program only applies to loans that are held by Freddie Mac and Fannie Mae. You know, the two large loan holding companies that the government took over some time ago. They are going as far as cutting rates to 2% to get your home payment to below 1/3 of your gross income.
First, you need to know if one of these two agencies owns your mortgage. Even if you got your home loan at a bank, it may be owned by one of these lenders now. These two large companies buy loans from commercial banks; they own a major portion of the nation’s home loans.
Just go to the Freddie Mac and the Fannie Mae sites to find out if they own your mortgage. You will just fill in some information about your house and yourself. Even if you do not think your loan is owned by these companies, still check. The bank that you got the loan through may have sold your loan but is still servicing it, you would not know that it had been sold. If they do not own your mortgage, you do not qualify.
For a rough idea if your mortgage amount will qualify for the program, divide your mortgage payment by your gross income, this will give your the percent the payment is of your gross income. Do not forget to add interest, insurance, taxes, and principal together for the entire house payment.
Two other ways you will qualify are; If you have an adjustable rate mortgage that has almost doubled in payment and mortgage loan rates. The second is if you qualified for your loan with household income and one of you lost a job or had a cut in hours worked.
To qualify, you have to convince the lender that you are in a tough place now but with the new mortgage, you will be fine and keep up on all payments. You will not qualify if you have a lot of money in the bank, you will not qualify if you have just a little bit of money in the bank. You will not qualify if you have a large amount of credit card debt, or high payments on car loans.
You will not qualify if you are unemployment payments, or if your income is too low to be able to reduce the home loan to 31% of your gross income.
There is just a little bitty window to squeeze through to qualify for this program. There was one lender that I read about that was quoted as saying “if you want to get the attention of the lender, you need to be delinquent by a month or two.”
There is help on the internet to see if your qualify, contact HUD, or another non-profit, Homeowner’s toolbox who claim they can estimate the probability of approval best mortgage loan rates for you.
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