Mortgage and Stress – Loan Modifications for Michigan Home Owners

When the Obama administration rolled out the Home Affordable Modification  Program (HAMP) in 2009, they estimated that up to 4 million people would try to seek relief from their existing mortgages using the program.  This is due mainly to the fact that officials believe we’re in one of the worst recession and housing collapses our country has ever seen.

Now that several years have passed, officials are seeing that those projections were optimistic.  According to our Treasury Department, approximately 700,000 homeowners have sought aid HAMP through the end of 2011.

Thankfully that’s a long way from the expected 4 million, which tells us that there aren’t as many people struggling and gasping for relief as expected.

Still, we know there are a lot of people who are intimidated by the mortgage process and may simply believe they’re not eligible for a loan modification in Michigan.  We know there are a lot of homeowners in a bad way right now, and trying to find relieve from a mortgage can be confusing.

The key is knowing and understanding what your options are, because education can be empowering.  It makes it easy for you to see the solution; and there really is a solution out there for current homeowners who need relief from a mortgage.  Refinancing a mortgage in Michigan at current rates almost guarantees that homeowners can start saving money right away if a loan modification isn’t possible.

What You Need to Know for a Mortgage Modification in Michigan

1. Is a Loan Modification Right for You?

This is the most important question.  While you might feel stressed from your current financial situation, it may not be as bad as you though.  Also, ask yourself whether or not you’re emotionally attached to your home.  A Michigan mortgage lender will likely extend the terms of the mortgage by up to 40 years to reduce your monthly payment.  If you actually owe more than the home is worth then a modification may not be the answer.  If you’re not ties to the home and don’t plan on staying there for a very long time, then consider speaking with a real estate agent about options to sell the home (like a short sale)

2. A Loan Modification is Not a Refinance

Loan modifications reduce your mortgage payment each month without the requirement for credit checks, appraisals, closing costs or home equity.  The only real qualification is proof of financial hardship which consists of reductions in income, illness, divorce and other circumstances that create a financial strain on the home to where financial obligations are not being met.

3. HAMP is Only One Option

While HAMP is a government program for modification of a Michigan mortgage, more than 70% of loan modifications in Michigan are handled internally through the individual or organization holding the mortgage note.  An important point of consideration; HAMP modifications are based on gross income where your mortgage must exceed 31% of what you make in a month.  With internet modifications, it’s typically based on your after-tax income.

If you find it difficult to navigate the loan modification process, or your modification is denied, then you still have other options.  Consider talking to a Michigan mortgage lender about getting a refinance.  This is a great time to refinance a mortgage and get it in at a much lower rate.  With the right refinance, you could save thousands of dollars a year over the course of your loan and greatly reduce your monthly obligation.