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If you answer yes to these questions you may eligible for an FHA loan modification.
- Is your home must be your primary residence? Do you own and occupy a single-family residence or a two- to four-unit home?
- Is your first mortgage must be equal to or less than $729,750? Are you having trouble paying your present mortgage because of a significant increase in your monthly payment, a reduction in your income, or a hardship like medical bills that has increased your expenses?
- Did you get your current mortgage before Jan. 1 2009?
- Is your total payment on your first mortgage, including principal, interest, taxes, insurance and any homeowner's association dues, over 31 percent of your gross income?
If you meet FHA loan modification requirements, your monthly mortgage loan payment can be reduced to 31 percent of your gross income. Servicers, who administer loans for lenders, can use several options to lower monthly mortgage loan payments of homeowners meeting FHA loan modification guidelines. They can lower your interest rate to as low as 2 percent and extend the loan term to up to 40 years. They can also defer your payment of part of the loan principal until the end of the loan term, in what's called principal forbearance. They also might even reduce your principal balance.
If you meet FHA loan modification guidelines, you can get paid for paying your mortgage on time. If you pay your mortgage on time the government will pay down your mortgage principal balance by $1000 every year. Your home loan amount could drop by as much as $5,000 over a period of five years.
Another good part of the FHA loan modification program is that you don't have to pay a fee or past-due late fees. Back taxes can be added to your mortgage balance, and if you get help from a HUD-approved housing counseling agency, you will not be charged a counseling fee.
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