Government Mortgage Reduction Programs, Check Out Your Options
Have your mortgage fees been stopping you from reaching your goals and dream? Like your dream car or dream vacation with your family? Has it ever occurred to you that the bank has probably blocked off your options because hey, they won’t get any customer left if you knew you had other options. In fact, have you heard of mortgage reduction programs?
This article will have you covered, from the most basic down to the specific examples of these reduction programs – one good example is the HARP Mortgage, the one former president Obama has revised? That one. And it’s not a scam like other people think it is. It can actually reduce your mortgage for $4,264 a year, that’s about $355 a month! Insane, right? Insanely true, though.
And these are not through banks, they are actually existing programs aside from HARP, under the government, some may not be that helps people lower their payments or pay their mortgage faster and as it may sound too good to be true, it is. In fact, you can actually save more money and save money with these programs.
What are Mortgage Reduction Programs?
Generally speaking, there are actual ways to reduce one’s mortgage, shorten its period and actual save you some financial and mental saneness. Mortgage interest technically can add thousands of dollars to your housing expenses, the longer you make your payment which eventually will seem like you have not paid anything and would result eventually to the foreclosure of your property – something none of us would want in the end.
So, here are a few general tips on how to reduce your mortgage balance:
- It all comes through your mortgage contract. Monthly or when you pay, you’ll be receiving your mortgage statement and that would present the information on your mortgage principal and balance that is left to be paid. You have to identify the minimum monthly mortgage payment. Since the lender pays property taxes and premiums of homeowner’s as part of what supposed to be is your job, but not as of the moment, you have an escrow account which includes one principal and one interest payment. You might want to look carefully into these things. Next step would be to verify your payment schedule. In most cases they are done during the 1st of every month, but on good terms, there can also be a 15-day grace period prior to the payment date. There are also mortgage bill coupons waiting to be used, interesting, right? You can mail them to your lender with your check of payment at the minimum one, you may also reduce it through an online payment.
- It might all boil down to your personal finances. Know and calculate your free monthly cash flow, from your monthly expenses to the money that is left, for some, there isn’t much left but that’s still some cash in there. Useful cash. You might want to try to split that up for your current mortgage fee and some investments. But be very careful on your mortgage interest rates as some may have the fixed-rate charged throughout the loan term but there are adjustable-rate mortgage (ARM) that may go from top to bottom and vice versa about your interest. Then, you might want to invest some money, like into stocks and bonds that offer higher potential returns, which in this part I would say be very careful there are a lot of scams going around and you just have to be sure on the stock market you’re planning to invest in. After that, you can send in extra mortgage principal payments which you can use to pay off some from the principal money.
Additional Options Include:
- Low interest rate, it may sound funny but it can actually be reduced. For example, from a $200,000 on a 30-year fixed rate being cut down from 7% to 5% will see actual results from their monthly payment which you can save about $256 a month. You can achieve these through refinancing your mortgage loan or can cite a financial hardship and request that the lender reduce their rate (some talking will do in there) but of course you’ll be needing proofs such as copies of your recent paycheck or your bank savings as long as it is evident there that your gross monthly income has really experienced some decrease. There are programs available for this specific tip as you proceed with the article.
- Restructured Loans, this is about changing your loan terms. From having a 10-year loan period to 20-year period, because obviously the cut would be different for longer payable years, then you’d apply the appeal to lower your interest rate so even if you’re in debt, you are kind of on a win-win situation.
- Decreasing your principal loan, and there’s no better way to do this than do the talking with your mortgage lender and ask to give a portion the loan balance and that could result to a reduction in your payments each month. This might be the hardest way to reduce your mortgage loan but it might be worth the try especially if you’re going through severe financial hardship. But if talking is not your thing, do not give up on lowering you principal yet, there are also programs that actually help you lower your principal cost.
Now that might be a lengthy list of general tips and techniques, but try to consider them, the process might be lengthy or may take some time but it will be worth it once you see excess money you didn’t even had before. If you do not think they are of powerful help anyway, there are more to come about government refinance programs you might want to check out.
The 2009 federal program also known as HARP which stands for Home Affordable Refinance Program has actually reached its third revision under the former US president Obama or sometimes called as “Obama Refi”, it was made on 2009 as part of that year’s economic stimulus program, at the time, mortgage rates had been dropping and so were U.S. home values thus the necessity for such programs.
Does “Born Before 1985 Mortgage” sound familiar? This is actually a reference to the HARP Program, but HARP doesn’t pay off your mortgage and you do not have to be born before 1985 to use it obviously. But rather, HARP refinance your existing balance into a potentially lower interest rate, therefore lowering your payment. It is also intended for people who owe more than their house’s worth which is also called as “upside-down” or “underwater”
Although there are some requirements needed, it wouldn’t hurt your butt to fix them especially if it is owned by Fannie Mae or Freddie Mac. What HARP does aside from lowering your interest, it is actually a 30-year fixed-rate mortgage which opened nationwide. However as some says some homeowners in Los Angeles, California; Miami. Florida; Phoenix, Arizona aren’t able to refinance.
But it doesn’t mean that your application will not be approved because when HARP was passed it was really intended for people who had lost home equity this this program makes it irrelevant for purposes of a refinance, opening a lot of doors for people who suffered under the economic situation.
As I’ve mentioned before, there has been versions of HARP and just an additional information, HARP 2.0 was released for the betterment of the program which has new mortgage lenders who were covered from errors of the original lender and that all loan-to-value (LTV) were removed and the 125% is no longer a limit. After this, HARP volume tripled in the next 12 months.
Unfortunately, though HARP Mortgage has been extended so many time in hope to help a whole lot of Americans suffering from painful mortgage loans and interests but it has officially expired last December 31, 2018.
However, since HARP has closed. There are new options yet to be tried like the Fannie or Freddie options, for refinance are an FHA Streamline Refinance or a standard refinance. You’ll find out more about it below.
Government Mortgage Refinance Programs
Since HARP has bid goodbye together with 2018, there are some similar programs left by the government in aid for their people. There are still a lot out there and you just have to find the right lender for you. But listed below are some:
- Loan Modification – which has the basic purpose of lowering your monthly payment to a more affordable level. An “affordable” mortgage payment is defined as 31% of the borrower’s monthly gross income. In order to modify your loan, you can either lower your interest rate, extend the life of your loan or lower your loan principal.
- Hardest Hit Fund (HHF) – which is administered by the US Treasury, which prioritized the states that were impacted by economic crisis. They have their local agencies that help homeowners in various ways: either for people who cannot afford the homes they’re in or move to a more affordable housing. HHR also helps in mortgage payments for unemployed individuals, principal reduction and other transactions.
- Home Affordable Unemployment Program (UP) – who also targets the unemployed ones which reduces or suspends your mortgage payments for 12 months. UP can also make your payments up to 31% only (the ideal payment).
- Principal Reduction Alternative (PRA) – they encourage your mortgage lender to reduce the amount of principal owed. There are about 100 loan service providers who participate under PRA.
- The Home Affordable Foreclosure Alternatives (HAFA) Program – who are secured and eligible for the Home Affordable Modification Program (HAMP) but are not able to secure a permanent load modification or who are on the cliff close to foreclosure. HAFA provides protection and money eligible to borrowers who decide to do a Short Sale or a Deed-in-Lieu of Foreclosure.
- Second Lien Modification Program (2MP) which helps homeowners with a second mortgage on their home or for homeowners whose first mortgage was modified under Home Affordable Modification Program (HAMP).
- Making Home Affordable (MHA) this program uses a variety of strategies inclusing refinancing assistance, loan modifications, and help for the unemployed. They also have a HOPE Hotline staffed with HUD-approved counselors whom you can call 24/7.
- Interest Rate Reduction Refinancing Loan (IRRRL) Program, which lets you get a new VA loan with a low fixed interest rate with no appraisal required
If all of these options still don’t suit you or doesn’t give you much of the relief needed, there are still some mortgage relief resources.
There are associations that could help like the Federal Housing Finance Agency (FHFA) Program, while there might be a lot to see on their website if you try to check it out. They also have a Mortgage Translations Home wherein you can get a collection of translated documents and tools to assist lenders, servicers, housing counselors and others in the application and process of their loans. Under their programs is the Affordable Housing and Community Development which was started last 2017 through the help of FHL Banks which is also an affiliate of the association.
There is also a California Association of Realtors (CAR) which has a lot to offer as well including their Mortgage Rescue which is a member benefit which provides both answers and assistance on finding lenders, loan qualifications, underwriting, short sales, funding, payoffs, REOs, Deeds in Lieu and overall preparing you for your homeownership or any mortgage related questions or issues.
All of the things mentioned may be hard to take in or takes time to be executed but it will be worth it once you’re able to experience the vacation and achieving your goals even with the background of still paying off your mortgages monthly.
There are really a lot of options offered, from general down to the specific programs you can appeal to and seek for help.
At the end of the day, it’s still better that your options are laid out than not laying them out and resulting to the foreclosure of your valuable possession called home. Hopeless and homeless should never mirror you.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.