Continuing my series of posts relating to the HAMP (Home Affordable Modification Program), I will now endeavor to clearly explain what exactly this program can do for you. Much of the literature put out by lenders in relation to this program is highly convoluted, and many struggling homeowners are unable to procure the help they need due to being unable to navigate and understand the often complex process and terms of the HAMP. Some borrowers can not be helped by the HAMP. These include those who have mortgages on investment properties, those with mortgages which exceed the applicable limit and those who are unable to document their income. However, many borrowers do qualify for help via the HAMP — so what exactly is this help? The HAMP will:
– Reduce your monthly mortgage payment to no more than 31% of your gross monthly income
– Reduce the interest rate on your mortgage to as low as 2%
– Extend the term of your mortgage
– Reduce the principal owed on your mortgage by up to $1000 for each year you pay it on time
These benefits can often prove to be the difference between staying in your home or losing it to foreclosure. That being said, there are scenarios where a homeowner is better off not taking advantage of the HAMP — and just to walk away. This is a difficult decision which touches upon ethics, pragmatism and a candid assessment of your financial situation. In my next post here at NeedMoney, I shall be diving into this most difficult of questions.