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Guidelines for Quailing HAMP Loan Modification

HAMP loan modification program allows homeowners to alter their terms of mortgage loan as to make their monthly payments more affordable.
Abilene, TX, United States of America ( 03/01/2011
The Home Affordable Modification Program was put in place to help homeowners that are stressed to make their mortgage payments every month avoid foreclosure and improve their financial condition. Though, a HAMP modification could be tough to qualify for if the homeowner doesn’t know these important guidelines.

Guidelines to Qualify for a HAMP Loan Modification:

1. Every HAMP modification plan is accepted or denied as the application is through with Net Present Value, or NPV Test. This analysis is intended to verify the possibility of the homeowner defaulting on the modified loan, the cost of the home, what would be cost of the home in the future, the borrower's capacity to make up missed mortgage installments on their own, and whether it would be additional profit for the lender to modify the loan or just allow homeowner to go into foreclosure. If a homeowner fails this analysis, he or she would be denied for a modification.

2. If homeowner is denied for a HAMP loan modification that doesn’t mean that they should lose hope. With just few tweaks to the homeowner’s earnings and expenses details can make a difference in passing or failing the NPV analysis. Though, homeowners need to know exactly what to tweak prior to reapplying. As well, homeowners should try to keep up to date on their mortgage payments as possible. If a home is too far into the foreclosure procedure, it may not be possible to reverse the condition.

3. One of the essential things which homeowners should be accepted for a HAMP program is a debt to income ratio of added than 31%. A homeowner should spend anywhere from 32 - 70% of their pre-tax monthly earnings on their mortgage installments. If a homeowner spends relatively compared to this amount on their mortgage payment, they would be not qualified to get a modification.

4. A homeowner has to prove that he or she would be able to make the payments on a modified loan; if they fail, the lender won’t be willing to finance the loan. This is one of the spot of a HAMP modification function that number of homeowners gets wrong. If this figure, as well as a homeowner's debt to income ratio fits into the guidelines, there are good chances that he or she will get eligible for a HAMP loan modification program and be on their way to an affordable mortgage loan.

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