| Homeowners looking to lower their mortgage | | | | homeowners insurance and any homeowners dues. |
| payment may be eligible for help with the federal | | | | The goal is to provide a very low affordable |
| HAMP program. Named Home Affordable Modification | | | | payment so that the borrower will not be at-risk of |
| Plan or HAMP, this federally subsidized loan workout | | | | default in the future. |
| plan aims to modify existing home loans for eligible | | | | How is this target 31% debt ratio calculated? Well, |
| borrowers so that a more affordable mortgage | | | | take the total gross monthly income and multiply that |
| payment can be offered. The goal is to stop the | | | | figure by 31. Then take that number and deduct your |
| flood of foreclosures and encourage homeowners to | | | | monthly property taxes, homeowners insurance and |
| keep making their mortgage payments. What does it | | | | any homeowners dues. What is left is your new |
| take to qualify for this government rescue program? | | | | target principal and interest payment. Is that number |
| Here is some specific information to get your started. | | | | affordable for you? If so, then it may be worth |
| One of the most critical factors used to determine | | | | applying for the federal HAMP program with your |
| who will qualify for the federal HAMP program is | | | | lender. |
| called debt ratio. This is a term that refers to the | | | | Next, your loan must be able to be modified by |
| amount of monthly income a borrower spends on | | | | reducing the interest rate or extending the loan term |
| their housing expenses. Obviously, if you have a high | | | | to reach that new target payment. If this can be |
| debt ratio, then most of your money each month is | | | | done using the standard methods, then you could be |
| going towards making your mortgage payment and | | | | a good candidate. Don't worry-you can use a |
| you could find yourself struggling to make ends meet. | | | | software program that is designed just for |
| This has caused many homeowners to fall behind, | | | | homeowners to figure all this out for you. Simply |
| especially if a loss of income or unexpected expense | | | | input your own specific income and expense and it |
| comes along. | | | | does all the calculations for you. Your debt ratio, |
| The federal HAMP program is designed with a target | | | | target payment, new interest rate and disposable |
| modified payment that equals a 31% debt ratio-that | | | | income are all figured automatically. You can see |
| is very low as it means that just 31% of your gross | | | | immediately if you have a good chance of meeting |
| (before taxes) income is going to be allocated for | | | | the approval guidelines and where to fine tune your |
| your entire housing expense. This includes principal | | | | application. |
| & interest, as well as property taxes, | | | | |