How To Qualify For A HUD Loan Modification

How To Qualify For HUD Loan Modification

The new Federal Home Affordable Refinance program has many homeowners asking how they can qualify for a HUD loan modification. If you are a homeowner who is struggling to make your monthly mortgage payments you may qualify for a HUD loan modification even if you are not yet delinquent on your payments. If you have had an increase in monthly expenses or a recent loss of income and you might be at risk of default because of insufficient funds, you may qualify for the program.

However, in order to qualify you must first meet certain criteria. The loan must have been originated on or before January 1, 2009. The home must be your primary residence and cannot be investor-owned, vacant or condemned. Your mortgage payment must be more than 31% of your gross monthly income and the loan must not exceed the fixed loan limits as established by Freddie Mac and Fannie Mae. Your loan also must be a first-lien loan with an unpaid principle balance of $729,750 or less. If you do qualify for a HUD loan modification, it is easy to apply and the government has provided a number of financial incentives for participating servicers in order to make the program as successful as possible.

In order to get the process started contact your lender or a loan modification counselor and ask if you can be considered for the Homeowner Affordability and Stability Plan. You will need your two most recent pay stubs and your most recent tax return. It is also a good idea to gather up all of your mortgage documents and any supporting documentation detailing any other debts you owe including your car loan, credit cards, student loans and signature loans. You will be required to sign an affidavit of financial hardship as well as IRS form 4506-T, requesting a transcript of your previous tax returns for the period required by the lender or counselor. The lender or counselor should handle the reminder of the process for you.

In addition to the immediate relief of lowering your monthly mortgage payments, there are a number of long term benefits to consider as well, including financial incentives such as being eligible for up to $1,000 of principle reduction payments annually for the first five years, interest rate reduction and extending the term of your loan up to forty years.