Finding Help with Mortgage Payments

Looking for help with mortgage payments in this economy is commonplace. Many home mortgage borrowers find themselves in a situation where they can no longer meet their monthly payment obligations and need some home mortgage help.

The first and best option is to approach your lender and try to negotiate a new payment plan. There are several other options open to you that can be used alongside lender negotiation.

Whatever reason is causing your struggle with mortgage payments each can requires a different approach to solve, this article addresses what you can do in some of the more common situations, like loss of a job.

The Making Home Affordable Modification Program

Due to the global economic crisis, the current administration has introduced a variety of new economic programs designed to ease the financial burdens of everyday Americans who find themselves under financial stress through no fault of their own. Provisions in some of the newly created legislation provides help for people struggling with mortgage payments.

Note that the Making Home Affordable Loan Modification Program works in conjunction with your lender, essentially, you are still negotiating with your lender for a more affordable amortization schedule for your loan. The criteria you need to meet to qualify for the program include the following.

• Your mortgage origination must date back to before January 1, 2009.
• Your mortgage must be on your primary residence.
• For a single family home the amount you owe must be less than $729,750.
• Your current monthly mortgage payment must exceed 31% of your monthly income.

You will also be required to show documentation to prove your financial hardship. If you qualify for this program, it will give you some leverage with your lender to restructure your mortgage and make your monthly mortgage payments more affordable. You may also be eligible to refinance your home through a government program that would provide lower interest rates than are currently being offered by your lender.

Negotiating with the Lender

One of the first questions you should be asking when seeking help with mortgage payments is, will I be able to lower my mortgage interest rate. Doing so could save you hundreds of dollars per month in reduced interest expense. But don't only look at changing the rate; also take a hard look at the structure of the interest schedule.

For instance, if you have an ARM (Adjustable Rate Mortgage) you want to investigate and run the numbers on switching to a fixed rate loan. Over the long term doing so may be a real advantage to you in that you will know exactly what your payment will be each month for the life of the loan and exactly when you will finish paying off your mortgage.

In some situations you may be able to switch to a fixed rate, but incur a penalty. As long as this penalty won’t sink you in the short term, you're probably better to pay it and make the switch. Since mortgage interest rates are at all time lows now, it is very likely that they will begin to increase in the near future.

What to Do If You're Unemployed

If you are unable to keep up with mortgage payments due to a job loss you may be able to get help through the Making Home Affordable scheme. The Home Affordable Unemployment Program can help you manage your mortgage temporarily while you look for a new job.

This program works by lowering or suspending your monthly mortgage payment for a limited period of time. The criteria you need to meet to qualify are similar to that of the Home Affordable Modification Program discussed above.