What would you do if you found yourself unable to make your mortgage payment? Panicking as thoughts of foreclosure flood your mind, while understandable, won’t help the situation. Fortunately, there are more productive approaches that you can take. If you dedicate a little time to investigating the government mortgage assistance programs available, you may be able to obtain the help you need to save your family’s home.
Government Mortgage Assistance
In 2009, the federal government launched the Making Home Affordable Program. Over the next 7 years, this mortgage assistance program helped some 1.8 million families avoid foreclosure before finally coming to an end on December 30, 2016. The bulk of the opportunities once offered by this particular program have passed. However, there are still various ways homeowners in trouble can get government mortgage assistance.
The Home Affordable Refinance Program
The Federal Housing Financing Agency’s Home Affordable Refinance Program (HARP) is designed to help homeowners who are underwater on their mortgage because their home’s value has dropped. This means that they owe more than the current market value of their property because their home is no longer worth what it once was.
The lone holdover from the Making Home Affordable Program, HARP allows homeowners to obtain better loan terms by refinancing their mortgage. With this program, homeowners can change from an adjustable-rate mortgage to a fixed-rate mortgage, get a lower interest rate, or arrange for a shorter loan term. However, the chance to use this program won’t be around forever. HARP was only extended for a few months. The program will not accept new applications after September 30, 2017.
While the clock may be ticking on this opportunity, it can still be a good option for homeowners struggling to pay their mortgage who qualify. To be eligible for this program, homeowners must meet the following criteria:
- Have a loan that is owned by Freddie Mac or Fannie Mae
- Have a loan that originated on or before May 31, 2009
- Be current on mortgage payments with no payments that were more than 30 days late in the last six months and no more than one such late payment in the last year
- Be refinancing a property that is their primary residence, a single-unit second home, or an investment property with up to four units
- Have a loan-to-value ratio, or LTV, that is greater than 80 percent
Counseling and Other Options
If the HARP program isn’t a good fit for you, there are other forms of government mortgage assistance available. For homeowners with Veterans Affairs mortgages (commonly referred to as VA loans), the U.S. Department of Veterans Affairs provides counseling assistance during times of trouble and may even intercede with the lender. Homeowners with Rural Development Home Loans through the U.S. Department of Agriculture can contact the agency to seek help working out a solution when paying their mortgage becomes difficult. The U.S. Department of Housing and Urban Development also provides counseling and assistance to Americans who are struggling with their mortgages.
The federal government strongly encourages lenders to work with homeowners who are experiencing difficulties. Most lenders would prefer to avoid the expensive foreclosure process when possible. As the Consumer Financial Protection Bureau points out, there are several strategies that lenders can employ to assist homeowners in financial distress. These include the following:
- Refinancing. This involves paying off an existing mortgage by taking out a new mortgage with better terms.
- Forbearance. This is a temporary suspension or reduction of mortgage payments that is sometimes granted to see homeowners through short periods of financial hardship.
- Loan modification. As the name suggests, a loan modification modifies the terms of a loan; it might reduce the interest rate or principal or extend the term of the loan to produce monthly payments that are more affordable.
- Repayment plans. Repayment plans are arrangements that allow homeowners to make up for missed payments over time, providing them with an opportunity to bring the loan current again.
Notes for the Future
HousingWire.com reports that the Federal Housing Finance Agency extended HARP in order to smooth the transition to new government mortgage assistance programs that it will be offering in October 2017. Like HARP, the new high-LTV program will help homeowners with underwater mortgages to refinance. While many details are still forthcoming, the agency has provided a list of some of the requirements that people will need to meet in order to qualify for the new program. To be eligible, homeowners must meet the following criteria:
- Have one or more sources of income
- Made all required payments in the last six months
- Missed no more than one payment in the last year
- Benefit from refinancing by obtaining a lower interest rate, a shorter amortization term, reduced monthly interest and principal payment, or a more stable mortgage product
If you are concerned about your ability to make your mortgage payments, the worst thing you can do is nothing. Federal and state governments and lenders offer numerous forms of assistance. To explore these options and determine which one best suits your circumstances, contact PrimeLending today.
Our team is committed to helping you navigate the home financing process, so that you can purchase the home of your dreams. At our branches located throughout Kansas City, we can help you explore our wide variety of loan products and programs. Plus, PrimeLending utilizes delegated underwriting, local appraisers, and cutting-edge technology to accelerate the underwriting and closing processes. When you’re ready to learn more, please give us a call at 844-701-5626.