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Know the loan modification details of FHA and conventional mortgages

Posted on | September 27, 2011 | No Comments

 

If you are buying a new home in Florida or if you are relocating in Florida, you need to know about the kinds of mortgage loans available in Florida. Knowing this would help you in loan modification whether it is conventional mortgage loan or an FHA loan. Read on to know about both in details.

Loan modification of conventional mortgage loans:

Also known as mortgage modification or restructuring, home loan modification of conventional mortgage is a process in which you can work with your lender to change the terms and conditions of your mortgage loan to make it more affordable if you are facing difficulties in paying back the mortgage, making the minimum mortgage payments or facing a foreclosure. The workout plan of the changed terms and conditions varies from lender to lender. However it includes either temporary or permanent changes in the interest rate of the mortgage, minimum monthly payment and the term of the mortgage loan so that the past amount could be rolled into the loan and the new balance could be re-amortized. The Home Affordable Modification Program (HAMP) introduced by the Federal government in February 2009 is structured to reduce the mortgage payments of homeowners who are struggling to make the monthly mortgage payments. The salient features of the HAMP plan are:
The lender would have to bring down the interest rate on the mortgage so that the monthly payment is not more than 38% of your income.
Lenders would also have to bring down the total amount of principal owed on the mortgage so that the monthly payments are reduced.
You will be put on a trial modification for 3 months at the new interest rate and monthly payments. If you can make successful payments the new terms will be implemented for 5 years.

Loan modification of FHA loans:
You might not be aware of the fact that you can modify your FHA loans; however loan modification of FHA loan is quite dissimilar from the traditional federal loan modification program such as HAMP, especially when it comes to the terms and conditions of the program. Since FHA loans have more flexible criteria as compared to traditional mortgage loans such as it is available at a lower credit score and the down payment you have to make is also lower than that of conventional loans; FHA loan modification has very limited terms and conditions. Usually an FHA plan entails you to agree on a fixed mortgage period of 30 years. In a loan modification this term can be reduced to 20 years and some other conditions can be worked upon too.
Thus now it will be easy for you to modify your mortgage or FHA loan in Florida after going through the information.

 

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