Learn about a federal government program, Hope for Homeowners, that is offered through the Federal Housing Authority (FHA). It will help hundreds of thousands of lower income homeowners pay or refinance their mortgages (including subprime). Some forms of help may even be available if the value of your home has significantly declined and if your loan is “underwater”. Continue with Hope for Homeowners.
To be clear, you don't need a pre-approval to start looking at houses. However, since a pre-approval is essentially the same as a full mortgage approval, just without a specific home in mind, it can be an extremely valuable shopping tool. Specifically, if you submit a pre-approval along with your offer, it tells the seller that you're a serious buyer who is not likely to run into trouble when obtaining financing. One caveat: A pre-approval and pre-qualification are two different things. A pre-qualification is based solely on information you provide and is not a commitment to lend money, therefore it doesn't carry nearly as much weight.
With an adjustable-rate mortgage or ARM, the interest rate—and therefore the amount of the monthly payment—can change. These loans start with a fixed rate for a pre-specified timeframe of 1, 3, 5, 7 or 10 years typically. After that time, the interest rate can change each year. What the rate changes to depend on the market rates and what is outlined in the mortgage agreement.
A jumbo mortgage is usually for amounts over the conforming loan limit, currently $453,100 for all states except Hawaii and Alaska, where it is higher. Additionally, in certain federally designated high-priced housing markets, such as New York City, Los Angeles and the entire San Jose-San Francisco-Oakland area, the conforming loan limit is $679,650.
Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, contact the IRS. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by your home.
Grants are awarded through a rather competitive application process. The applications themselves are quite complex and failing to answer any question could result in a denial. The good news is that there is literally millions of dollars in grant money made available each year. Many grants are offered only to minorities or to applicants meeting certain qualifications, such as earning a low income. These restrictions reduce the number of applications, meaning that there is less competition for the award. There is also no limit to the number of times an applicant can apply for a grant, which even further increases the odds of receiving the offered funds.
This website provides general information about Keep Your Home California, its programs and services, and summarizes major policies and guidelines pertaining to foreclosure prevention assistance. Website content does not always reflect the most recent changes to programs or services nor is it intended to be a comprehensive resource for determining program eligibility. Program descriptions are intended to provide a broad overview of current programs and may not include all of the elements considered in the eligibility process. Keep Your Home California reserves the right to change, delete, supplement or otherwise amend, at any time, the information, requirements, policies, procedures and program descriptions contained on this website.
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The Hardest Hit Fund was created to provide additional options to residents of those states that have the highest unemployment rates, most significant job losses, and that have been hit hardest by the nation’s housing crisis. This program is only available in certain parts of the country. Borrowers can qualify for zero interest rate loans that do not need to be repaid, so these can be thought of as grants. Click here to read more on Hardest Hit mortgage fund.
Treasury/FHA Second Lien Program (FHA2LP): If you have a second mortgage and the mortgage servicer of your first mortgage agrees to participate in FHA Short Refinance, you may qualify to have your second mortgage on the same home reduced or eliminated through FHA2LP. If the servicer of your second mortgage agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115% of your home’s current value.
Find information on the Home Affordable Foreclosure Alternatives (HAFA) program, which is the new federal government short sale program. This is a plan created by the Obama administration that provides financial incentives to both homeowners and lenders. It both encourages the parties to use short sale process by providing financial aid to banks and homeowners, and it also simplifies the process. Find more on the short sale program from HAFA.
Simply put, every month you pay back a portion of the principal (the amount you’ve borrowed) plus the interest accrued for the month. Your lender will use an amortization formula to create a payment schedule that breaks down each payment into paying off principal and interest. The length or life of your loan also determines how much you’ll pay each month.
Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
There are a number of programs to assist homeowners who are at risk of foreclosure and otherwise struggling with their monthly mortgage payments. The majority of these programs are administered through the U.S. Treasury Department and HUD. This page provides a summary of these various programs. Please continue reading in order to determine which program can best assist you.
As an example, when I was buying my first home, my lender called me three days before closing to let me know that my credit score had fallen to one point below the threshold for my interest rate, so I would either have to take an action that would improve my credit score immediately or accept a significantly higher interest rate. The solution required me to pay off one of my credit cards and fax proof of it to the lender -- not an impossible situation, but certainly a hassle when I was told it had to be done right away and I was at work.
When you apply for a mortgage, you will need to provide your lender with a number of financial documents. Having these documents already assembled will help accelerate the processing of your loan application. At a minimum, you should be prepared to provide your last two pay stubs, your most recent W-2, your last two years of tax returns, and current bank and brokerage statements.
Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, contact the IRS, and consider consulting a financial advisor, accountant, or attorney.
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Mortgage forbearance programs are offered by numerous lenders, including Bank of America, JP Morgan, Citibank, and Wells Fargo. Forbearance allows borrowers a temporary suspension of their monthly mortgage payments. So a homeowner will have time to explore their options, receive counseling, or modify their loan during this timeframe. In addition, a foreclosure on your home will not occur during the forbearance period. Learn more on mortgage forbearance.