Obama's Mortgage Modification Loans - How to Meet Debt Ratio Criteria

The debt ratio is a very crucial part of qualifying for a Home Mortgage Modification Loan. All lenders have specific requirements to qualify; Obama's Home Stimulus Plan does as well. Calculating your debt ratio isn't as complicated as it may first appear. You do need to know how to do this before even applying for a modification loan. We will walk you through it here, a few simple steps and you will have your debt ratio!

Most lenders want your income to debt ratio to be under 45%. Basically that means your total monthly mortgage payment (including taxes, insurance, homeowner dues) is less than 45% of your total gross monthly income. Obama's home stimulus plan, including a couple of options for a mortgage loan modification has a goal of getting your debt ratio as low as 31%. This means getting your monthly mortgage payment much lower. In order to reach that goal the government is sharing the cost.

Once you know your debt ratio, you can figure out what your new modified mortgage payment should be and what it will take to get there. OK, let's go over the steps. First, find your target payment amount, make sure you can afford it (it fits in your budget) and it meets your lenders criteria. Use the 31% guideline as your goal debt ratio. For example, if you lower your current interest rate to 2%, and then stretch your loan out to a 40 year term, you will meet the acceptable ratio. (Again, your target mortgage payment has to be less than 31% of your gross monthly income).

Now when you fill out your income and expense forms, it will be clear that your target modified mortgage payment meets the criteria of the lender and will get you approved much faster! It isn't as complicated as most think, it's simply a matter of using simple math. Calculate, make the adjustments to your numbers, come up with a payment that is within the 31% goal and complete your application. This is crucial to getting approved!

You can get much more information and answers to your questions here, Loan Modification Specialists [http://loanmodificationsecrets.org]. I took the time to find this site for you, so you will be fully informed and have the edge to get qualified and save your home!

Don't panic, do your homework, follow the guidelines and you can be one of the millions that have saved their homes with a Loan Modification! Start the process today and sleep peacefully in your home tomorrow!

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Do You Qualify For a Mortgage Modification Loan Program? Find Out What Criteria is Needed

According to the home loan program which has been launched by President Obama, $75 billion has been allocated to American homeowners for helping them get some time to avoid foreclosure. This will allow them to stay in their homes with lower mortgage payments at a reduced rate of interest. But there are a few qualifications which need to be fulfilled so that you become eligible for the mortgage modification loan.

The first and foremost aspect which should be fulfilled is that the mortgage should be on the primary residence of the homeowner. The next point is that only first mortgages are applicable. The mortgages on second deeds are not eligible for loan modification. Contrary to previous loan modification schemes during President Bush's tenure, you do not need to be delinquent to avail of the mortgage modification loan. You just have to show that the current events are indicative of financial hardships which may occur in the future or are currently occurring. You should be able to submit all necessary documents to prove that you have a sufficient source of income which would be enough to pay for the modified mortgage monthly payments. Apart from this, you should submit all paperwork which is necessary for review of loan modification application.

There are a number of benefits of such a loan modification scheme. The rate of interest is going to be reduced to a very low 2% if the lenders find that you are worthy of the modification. Also, the payment period gets increased to a maximum of 40 years which provides enough time for loan payment. The final advantage is that a portion of the capital gets deferred which is very welcome for the homeowners. All this are available to anyone who gets approved for the mortgage modification loan. Though the program is a voluntary program, most of the leading banks are expected to participate which they do.

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Criteria Required For Mortgage Modification Loan

The recession has caused huge number of home owners struggle to pay their monthly payments and also face the foreclosure. This problem can be overcome by making use of the loan modification process. Most of the people think that this process is a bit tedious one and time consuming. But it is not so as it can be done in an easier way under guidance.

Now, let us see the criteria that are required to avail the home loan modification.

The first and the most important criteria is that the house where you are living should be the one on which you should take the mortgage loan.  The loan will be rejected if the loan is taken for a house which is given for rental or lease. The second criterion is that the loan modification will get applied only to loans where the monthly payment is higher than the 31% of monthly income.

The third is the unpaid principle of the loan should be less than $ 7, 29,750 and the date of the loan origination should be before Jan 1, 2009. The fourth criterion is that the today value of the mortgaged property is less than the mortgaged amount.

In addition to the above criteria, the mortgage lender require some more information such as the principal balance on the mortgage loan, the ratio of principal, interest, taxes and insurance. If the values you have mentioned matches with the criteria specified by the lender, you might get considered for the same.

Mortgage modification loan is not a loan by itself but it is just a modification to your existing mortgage loan. The modified terms will help you in reduced and affordable monthly payments.

Once you become eligible for the loan modification, you will have to enter the required information (financial data) in the application form and submit it for further process. Tax returns, pay slips and the bank statements are the mostly requested financial data. You should also write a hardship letter explaining the events that caused you to become unable to pay the mortgage loan and make sure to mention the hardship situation such as lay off, injury, death of a spouse, divorce/separation and illness.

This Mortgage modification loan program is applicable only for an American citizen who is able to prove his/her financial difficulty. By taking part in this program you will only have to pay 38% of your gross monthly income out of which 7% will be paid by the government. In addition, the interest rate will be reduced by 2% and $1000 from your principal will be paid by the government every year.

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