How Does The Government Mortgage Refinance Plan Benefit You?

June 3, 2010 - PRLog -- Government mortgage refinance plan is meant to reduce your mortgage payments by up to 30 percent. This is for people who have defaulted on their loans or will do so and also individuals who do not qualify for Home Affordable Modification Program. The good thing about the government mortgage refinance is that even if the property in question is not in your name you can still apply. In the period of six months the lender and borrower plan on how to prevent the foreclosure and if the plan is successful then the lender gets the incentive.

You can apply for Home Affordable Modification Program or refinancing mortgage loans, if you can fulfill the following criteria:

•   You have or are at the risk of defaulting.
•   Your loan started off on or before January 1, 2009.
•   The outstanding principal is not more than $729,750,
•   The outstanding sum is not more than 125% of the value of the home.
•   You should be able to prove your hardship due to which you could not avoid defaulting.

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With this plan the payments can be lowered up to 50%. The idea is to bring the payments fewer than 38% of the total monthly earnings of the debtor. This is achieved by lowering interest rate, reducing the principal or increasing the loan period. Nonetheless, the rate of interest cannot be reduced fewer than 2%. Lenders are motivated with the help of incentives. Every mortgage refinances application that is accepted the lender gets a fee of $1000. If the borrower is paying regular payments then the lender would get $1000 each year for the former three years. There are incentives for borrowers too. If a borrower is regular with the payments then he is entitled would to $1000 reduction in principal amount each year for the initial five years.

Make sure you know who and where you are talking to. Do not fall prey to any scams. There is no need to pay for any counseling. Also stay away from people who want to charge government mortgage reduction program's fee. Thus be very careful while getting the mortgage refinance.

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