Obama's Federal Loan Modification - Your Questions Answered!

As millions of Americans face foreclosure, Obama's federal loan modification plan has left many of us with questions and confusion. What are all the programs and would I qualify for any of them? How is that $75 billion dollars from Obama's home stimulus plan being used? If you are one of those millions of Americans, it's time to get the facts and take the steps to save your home.
How do you get started? Which option is best for you? We will try to answer these questions and put you on the right path toward your own home mortgage loan.
1. Loan Modification, what is it? It simply means that you keep your same lending institution, but the terms of your loan change. Some of the changes that you could qualify for include a lower interest rate, lower monthly payments, extending the length of your loan and even lowering your principle. The changes may be temporary or permanent depending upon your specific situation, but the end result will be keeping your home!
2. Is my bank required to modify my loan by the federal government? All federal modification loans are voluntary. Your lender will review your loan and decide if modifying it will benefit everyone involved.
3. Must I be in default to qualify? Absolutely not! Obama's home stimulus plan does include an incentive to lenders that are able to modify a loan prior to it becoming delinquent. The reason for this is simple, help the homeowner before they get behind. Loans that are delinquent and facing foreclosure will take precedence due to the urgency involved.
4. Would I qualify for financial hardship? If your financial situation has changed dramatically due to circumstance beyond your control, the answer is mostly likely, YES. Did you lose your job, suffer a serious medical expense, or go through a divorce? Perhaps you were serving in the military. These are all circumstances that you can explain in detail when you write your hardship letter to your lender.
5. How can I find out if I qualify for a loan modification? Each home loan modification program and each individual lender has their own guidelines and criteria. If you can meet those guidelines and criteria, you have a good chance of qualifying.
6. When should I call my lender? Being prepared is paramount! Your first step should be to create a budget, prepare your financial statements and create your hardship letter. Call your lender only after you have done your research, know what the requirements are and are prepared and able to meet them.
7. How much does a loan modification cost? There are NO upfront fees under the Federal loan modification plan. The only time upfront money may come into play is if you are significantly behind in your mortgage payments. If this is the case, your lender may request a deposit as good faith.
There are statistics that are indicating that over 150,000 homeowners have not only gotten a loan modification but did it on their own. The best course of action to begin is to do your homework! Research, gather all of the information you can get your hands on and be prepared before beginning the home loan modification process.

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