Obama's HAMP Loan Modification - Guide to Qualify For Government Assistance

Government assistance may be available to borrowers who are facing high, unaffordable mortgage payments. Obama's for homeowners is called HAMP-which stands for Home Affordable Modification Plan. This home rescue effort is being paid by $75 billion in stimulus funds, and is designed to help millions of borrowers avoid foreclosure.

Struggling with unaffordable mortgage payments? Here is a HAMP loan modification guide to quickly get you started:

1. Learn the 5 eligibility requirements that you must meet in order to apply
2. Complete and submit an accurate and acceptable loan modification application
3. Be sure that you provide all the needed documentation in your application package
4. Be diligent about following up with your lender to make sure your file is moving through the process

Obama's government loan workout option has standard approval guidelines and a standard method used to modify home loan. These standard guidelines and methods make it easier for borrowers to learn if they qualify, and also give a clue as to what is required when completing the application form.

Another part of the HAMP loan modification guide explains debt ratio and how the federal plan determines the borrowers current ratio and their new debt ratio, after the loan workout is proposed. Here is the basic formula for determining debt ratio under the government assistance plan:

1. New target payment will equal 31% of the household gross income
2. Multipy the current total gross income times 31% to learn the new total target payment
3. Subtract the monthly property taxes, monthly homeowners insurance and monthly HOA dues to arrive at the new principal and interest target payment
4. If the new target payment can be reached by lowering the interest rate down to as low as 2% and extending the loan term out to 40 years, then the basic guidelines have been met

Homeowners wishing to apply for Obama's HAMP loan modification need to learn the basics of how to apply correctly. This can be confusing, but there is a software program designed just for borrowers that does all the calculations automatically and ensures that the figures on the application are accurate and acceptable. Those homeowners who take the time to learn and then submit their paperwork properly will have a much better chance of success.

Susan Gregory is the author of two resource books for homeowners and real estate professionals, The Complete Loan Modification Guide Kit and The Stimulus Book-HAMP & HAFA Edition. She also teaches workshop training classes for the federal programs to help real estate professionals assist homeowners with home retention and exit strategies. The Complete Loan Modification Guide kit provides a valuable resource for borrowers that includes a step by step handbook, required forms, and a software program that mimics the federal approval triggers for loan modification. An advocate for homeowners, Susan also offers free 30 day email support for all of her clients who purchase her publications. Thousands of homeowners have been helped using these materials.