3 Ways to Lower Your Mortgage Payment
Over the last few years, there have been many efforts to help homeowners save money on their largest monthly expense, their mortgage. As home prices have retreated, more and more families and individuals have found that they are under water in their homes. Making a large monthly payment on a mortgage that is worth far more than the home is not an attractive option for many people. In response to this, there have been a number of government sponsored programs to help homeowners make their mortgages affordable. Below are just three of the ways to lower your mortgage payment.
The 3 Ways to Lower Your Mortgage Payment
1. Home Affordable Modification Program (HAMP) If you are a homeowner who is having difficulty maintaining your payments, the Home Affordable Modification Program may be the best option for lowering your payment to something that is more affordable. Provided that you are employed, you may be eligible for this program. In the past, only primary residences were eligible for modification however recent expansions to the program have included non-primary residences provided the home is either rented or intended to be rented. Also, qualifying debt-to-income ratios have been expanded to include lower ratios. Provided you are demonstrating a financial hardship or are currently delinquent, you may be eligible for this program. This program is designed for mortgages owned or guaranteed by Fannie Mae or Freddie Mac.
2. Principal Reduction Alternative (PRA). If your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac, you may still be eligible for a measure of assistance. If you owe more than your home is worth and occupy it as your primary residence, you may be eligible for the Principal Reduction Alternative. This program essentially reduces your principal amount to a level that is more in line with what the home is worth. In order to be approved for this program, you must demonstrate a financial hardship or be currently delinquent. There are more than a 100 servicers participating in these programs; the largest including CitiMortgage, JP Morgan Chase, and Wells Fargo.
3. Home Affordable Refinance Program (HARP). This program is designed for those homeowners who are current on their mortgage, but are underwater to the point that traditional refinancing programs will not be approved due to loan to value issues. Refinancing through the Home Affordable Refinance Program is designed to help you manage your personal finances more effectively by making your mortgage more affordable, and therefore giving you a mortgage payment that should lead to more stable payments on your part. This program does require a full application and underwriting process. Any applicable fees apply. Eligibility in this program is very similar to other government programs. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and must have been sold on or before May 31, 2009. In addition, the current loan-to-value ratio must be greater than 80%. One main difference is that the HARP requires a good payment history over the past 12 months.