Mortgage assistance is available from the federal government through various programs that are designed to help first time home buyers. With the housing market still shaky and values on the decline, the government is willing to step in and provide mortgage assistance to those who need it. What exactly is mortgage assistance? It is money that is provided to help the borrower to refinance their loan so they can afford their mortgage payments. The government has established several programs to help buyers who may qualify.
When you take out a mortgage, you are essentially borrowing a financial institution’s money in return for a specific note. This note is typically called an “asset.” The mortgage lender owns the note, while you are the legal owner of the asset (i.e. your home). The mortgage lender may agree to write you a promissory note, which is a legal agreement allowing them to take the property back if you cannot afford your monthly payments. In the event that you cannot make your payments, the lender may agree to a repayment plan that will result in a lower monthly payment for you and allow you to catch up on late payments.
How do you find out if you are eligible for these programs? You can start by contacting your lender and asking what programs may be available to you. Depending on your situation, you may have to work with your lender on a co-signor loan to qualify. In other situations, you may not be able to get a co-signor, or you may only qualify if you have great credit and a low debt to income ratio. There are many variables that determine who is approved for mortgage assistance.
Another way to find out if you qualify for mortgage assistance is to visit your local housing finance agency (sometimes called a Neighborhood Stabilization Program). HUD is the U.S. Department of Housing and Urban Development, and works with private lenders, local governments and public agencies to support homeowners and help them avoid foreclosure. In order to participate in a program, borrowers will need to meet certain income guidelines. However, the government does not assist with the process unless borrowers must be facing imminent foreclosure. Once a borrower is facing a possible foreclosure, they will have until the end of the month to apply to receive assistance from the housing finance agency.
In addition to the above mentioned government programs, there are also private lenders who offer assistance for mortgage payments to eligible homeowners. However, these programs often require borrowers to own at least one of their homes. Homeowners must prove they are unable to pay for a new mortgage by October 1st of each year in order to be eligible for a refinance. In addition to providing a refinance option, the program offers counseling services. For more information on these services, call your local housing finance agency or visit the website of the National Association of Realtors.
If you do qualify for assistance, you’ll want to check out the details of your specific program. Mortgage assistance programs differ in many ways. Some will require a lower than average debt-to-income ratio. Others will not concern themselves with debt-to-income but will require borrowers to own their primary residence. Many homeowners will fall into one of these qualifying categories and will be able to save their home from foreclosure. The details of each program are specific, and the requirements will vary.
One additional type of mortgage payment assistance program exists in the form of the federal loan modification program. The federal government recognizes two different types of homeowners: those who are experiencing a financial hardship and those who are not. Homeowners in either of these categories can apply to be placed in a low-cost or no-cost loan modification program. To qualify, borrowers must demonstrate to the housing development authority that they will be unable to make their mortgage payment. This includes a calculation of at least two factors, such as their gross monthly income and expenses.
For example, if a borrower’s mortgage payments are at their third-highest level, and they meet the other requirements of the federal loan modification program, they may qualify for assistance through the No Income Tax Credit program. Another option available through HUD is the Alternative Need Allowance program. It requires borrowers to show that their income does not exceed the national median income. One caveat is that this income requirement only applies to new applicants. Many of the existing clients of mortgage payment assistance programs may continue to receive benefits based on their income in future years. This is done in order to maintain and promote continuity within the service.