by Dan Krell © 2009
www.DanKrell.com
If selling your home is not in your near future, you may be indifferent to real estate market trends. But, would you be interested in lowering your mortgage payment? 
Several months ago I told you about the government push to modify and refinance mortgages to assist home owners to keep their homes. The Obama Administration’s Making Home Affordable program (makinghomeaffordable.gov) is up and running and gaining momentum!
If you are facing financial challenges and need assistance to lower your mortgage payment, the Home Affordable Modification may be able to help you. To qualify, the mortgage must be on your principle residence, must not exceed $720,750, and must have been received prior to January 1, 2009. Additional requirements include having difficulty in paying the monthly payment due to: having increases in monthly payments, having a reduced income, experiencing hardships that increase your expenses; and/or your mortgage payment exceeds 31% of your gross income.
If you are current on your mortgage but find it difficult to refinance because the mortgage balance exceeds your home’s value, the Making Home Affordable Refinance may be for you. The Making Home Affordable Refinance program allows home owners to refinance mortgages up to 125% of the value of the home. To qualify you must be current on your mortgage, the mortgage must be on a residential building (up to four units) that was bought by Fannie Mae or Freddie Mac. To find out if your mortgage was sold to either Fannie Mae or Freddie Mac, you can either call your servicer or you can check on your own by going to their corresponding websites (loanlookup.fanniemae.com or freddiemac.com).
You can determine if you qualify for the Home Affordable programs through completing a brief questionnaire on the Making Home Affordable website (makinghomeaffordable.gov). If you qualify for these programs, you will need to contact your mortgage servicer and request one of the Home Affordable programs (refinance or modification). The servicer will need your income and asset information (hardship information is also required to process the Home Affordable Modification) to assist them in processing your request. The process will be slow, but making frequent calls to follow the progress is necessary to ensure you don’t miss a step.
What if your mortgage balance is less than your home’s value and your credit is excellent? If you haven’t yet taken advantage of recent mortgage interest rate lows, you might consider an automatic rate reduction loan (ARR mortgage). An ARR mortgage is a loan where the rate automatically lowers as mortgage rates fall. ARR mortgage programs have been around for some time, but haven’t received much press lately because mortgage rates have been relatively low.
Although not many lenders offer ARR mortgage programs, ARC Loan (arcloan.com) has been offering “mortgage management” since 1993. According to the ARC Loan website, the program seeks to take advantage of mortgage cycles to assist their clients in saving money and reducing debt. Because everyone’s needs and situations are different, ARC Loan consultants take the time to provide a personalized analysis to determine if you qualify and if an ARC Loan can improve your financial picture.
Many options now exist to lower mortgage payments for home owners in various financial situations. If you qualify, taking advantage of these programs may lower your monthly payments.
This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 31, 2009. Copyright © 2009 Dan Krell