As an increasing number of families all across the country lose their financial stability one way or another, more and more homeowners are having to turn to their lenders and ask for home loan modification hardship assistance to keep their homes. Many families have no other option than to lean on the Home Affordable Modification Plan and get this assistance, as they are facing impending foreclosure.
Modification hardship assistance is, at the core, an agreement between a borrower and a lender to lower the borrower’s mortgage payments. This is possible by extending the borrower’s mortgage over a five year period and reducing the total interest on the mortgage. Because the mortgage is being extended over a five year period, depending on the size of the mortgage and how much is left to pay, there may be a rise in payments near the end of the term to make up for the lower payments up until that time. But for many, immediate assistance is needed, and the later ballooning of the payments are worth it.
Some homeowners mistake home loan modification hardship assistance with refinancing, and while both can help a homeowner, they are completely different entities.
Refinancing is a reinstating of a mortgage loan so the homeowner can cash out on some of the funds that have already gone into the loan, and in some cases the mortgage is overall lowered because the value of the property has gone down. Refinancing usually requires very good credit and mortgage payment history, both of which are uncommon in today’s homeowners.
Home loan modification hardship assistance is not reinstating the loan, but rather it is a simple lowering of payments and a possible lower interest rate. It is also available for almost any homeowner who has mediocre credit and been late on mortgage payments, and in some cases available to homeowners who have even gone bankrupt. Assitance is much more easily achievable to today’s average American family than refinancing, as most households simply have not been able to pay their bills and keep their credit in good shape.
It is recommended that any homeowner who is going through a period of financial hardship look into home loan modification hardship assistance, even if they are not sure they will qualify. The guidelines to qualify encompass a large percentage of people, and it can do no harm to visit a free counseling service to get their opinion. Almost every middle-income household in the country is having problems paying their mortgage, and the hardship assistance plan drawn up by the Obama Administration caters to that widespread need.