Q: I have a mortgage that is too much for me to pay monthly. What are my options?
A: You may qualify for the new program recently put into place by the Obama administration. The “Making Home Affordable” program is designed to help millions of homeowners avoid foreclosure.
There are two components to the program. One part concentrates on people who are having trouble refinancing their homes because of declining home values around the country. You may be eligible to refinance your first mortgage (including any refinancing costs), if it does not exceed 105% of the current market value of the home. For example, if your home is worth $200,000 but you owe $210,000 or less, you may qualify.
The second part of the program is designed for homeowners who are struggling to make their monthly mortgage payments because their interest rate has increased or they’ve had a disruption in their income. Under this part of the “Making Home Affordable” program, your monthly mortgage payment cannot be more than 31% of your gross or pre-tax monthly income.
Treasury has just launched a new Web site, Making Home Affordable.gov with more information about the program. On it, you will find a calculator where you can estimate what your new modified mortgage payment will be, using the new 31% guideline. It’s possible, depending on your servicer and how heavy your mortgage is, for you to get a temporary interest rate as low as 2%.
Again, for more details and to see if you qualify for the “Making Home Affordable” program, check out the new Treasury site. You can take a quick four- or five-question survey to see if you are eligible.
Whether you qualify for the program or not, get some help by calling a HUD-approved housing counselor. Call 1-888-995-HOPE (4673) to get help.