Mortgage Assistance Program

How to Choose the Right Mortgage Assistance Program

There are a good number of mortgage assistance programs that you can use today. Because of recession and the sub-prime mortgage crisis, the federal government and some non-government organizations have set up programs to assist those that are having trouble in paying for their mortgage.

If you qualify, you should be able to gain assistance and significantly reduce your mortgage payment every month. As the country is adjusting to recession, this form of assistance is also increasing so that this program could reach out to more property owners nationwide.

However, the phrase “if you qualify” could mean a lot. It could be in the interest rate required; the amount you owe, the equity in your property and even the required payment counseling program will be required before you could be approved for your loan. The requirements are sometimes too much that you are going through a very difficult process just to save a few dollars a month.

For Delinquents Only

A common requirement for government assistance for mortgage problems is when you are having problems in meeting your monthly payments. This actually makes sense since the purpose of these bail-out programs in mortgage is for those who are having trouble in paying for this mortgage.

But this opens a lot of concerns for other property owners. There are property owners who put first in their budget the monthly mortgage payment. Even if they are tight in paying for other needs and bills, the mortgage payment always comes first. As a result, they are never delinquent in their monthly mortgage payment. But they are currently having some trouble in paying for that loan.

The usual answer is to purposely miss your monthly payment. But it would only create more problems than answer. Although there are guidelines on how the property owner could be qualified, those who wish to be part of the program are not guaranteed for approval – even if you seek the help of a real estate expert. You could be missing your mortgage payments for nothing.

Near Predatory Interest Rate

There are also non-government organizations that offer refinancing programs for those who are experiencing very high interest rates. But they only offer this program for those who are on exorbitant interest rates. Usually they only accept those who are on 10% interest rate. Any application below that interest rate is not accepted.

This creates a problem for those who are near that interest rate. Those who are currently paying their monthly mortgage with 7%-9% interest rate obviously could not be part of the program. They could opt for regular refinancing but they might not enjoy the same rates offered by non-government organizations because of their low credit rating. In short, they are caught in the middle

Even those that are currently within the 10% interest rate may not be able to qualify for the said program. Again refinancing is just not an option because they might end up with nearly the same interest rate. The convenience is just not there.

Other Requirements and Loopholes

For non-government organizations, there is also a requirement of going through credit counseling. Although they sound good, it could be really time consuming and you might end up spending more because of consultation fees that you need to pay every month or annually.

Before you agree to anything, make sure that the time frame for counseling is indicated. Also read the terms and conditions of the assistance program. There could be a chance that you might be required to pay early payment penalties with your current lender.

There are a good number of mortgage assistance programs today. However, being approved to one of them is difficult or even costly. Make sure that the terms and conditions of the program would be in your favor.