The United States economy is under extreme pressure; because of this, loan modification has been created. Almost six million homeowners currently face foreclosure and the recession is mostly to blame; consumer spending is way down as well.
In order to fight this problem, President Obama has organized a well-formulated and well-devised financial stimulus package for loan modification that if used properly can produce an outstanding incentive to the American economy through the home market system.
According to Obama's Home Mortgage Plan, every new homeowner should be able to have an interest rate of just 4.5% and a 30-year fixed rate mortgage on their home. Current homeowners should be able to refinance at an interest rate of 4.5% if they choose.
Contrary to a refinance, a loan modification is not an additional loan. Instead, it is a variance in the terms of a loan you already have acquired. Lenders are enticed to join in the loan modification process with government-provided incentives. These are the incentives provided:
1. The government pays part of the cost for loan modification for the lender to do the modification, thereby lowering the borrower's cost from 38% of their gross income to 31%.
2. If a borrower is responsible about paying on the loan, they will receive $1,000 each year for up to five years.
3. For each qualifying loan modification in which a lender participates, the lender will receive up to $1,500.
4. The U.S. government could subsidize up to $10,500 per home.
Four of the benefits that The Obama Loan Modification Plan give the economy are listed below.
1. People will save money through the reduced interest rate they will receive upon qualifying for a loan modification plan.
2. Borrowers are encouraged to choose to utilize this program with offers of cash incentives.
3. There is also a $1,000 incentive simply for originating the loan modification, and an additional $1,000 for three years. These incentives, obviously, are only valid if you pay your dues on time and do not let them go into default.
4. Also, the program plans to lower the interest rate and raise the term of the loan, if the desired percentage of gross monthly income isn't met.
Remember, you must meet particular guidelines to qualify and obtain a new loan modification processing plan. One major guideline is you must be the main resident and the loan can't be from before January 1st 2009.
Author Resource:
Anthony Flores is highly recognized in the field of loan modification processing and http://www.do-it-yourself-loan-modifications.com .Visit our site to see if you qualify for loan modification today!
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