There are times when homeowners may have trouble making their mortgage payments – unexpected job loss or illness, sudden expenses, and other unavoidable life situations can interfere with your ability to meet your financial obligations. When this happens, you may have options that allow you to stay in your home.
The government created a loan modification program in 2009, designed to help homeowners get back on track in order to avoidforeclosure. HAMP (Home Affordable Modification Program) is a way of restructuring a mortgage loan so that the payments are set at 31% of the owner’s pre-tax income.
Qualifications for HAMP include:
- Having gotten your mortgage loan on or before January 1, 2009, and owe a maximum of $729,750 for a single family residence or rental unit
- Being able to document that you make enough money to pay the modified mortgage amount
- Being able to document financial hardship that has caused, or may cause, you to become delinquent on your payments (may include loss of income, divorce, or illness)
Not all lenders participate in HAMP, though some offer their own loan modification programs.
If you cannot qualify for a loan modification, you may be able to get a forbearance – which means the lender suspends or reduces payments for a period of up to 90 days. You may also choose to sell your home, either in a short sale or to an investor who can pay cash.
Regardless of what you choose to do, the important thing is to act as soon as you know there is a problem.