Loan Modification Help: Before you miss a mortgage payment, consider the HARP program

Should I miss a mortgage payment? 

When at the beginning stages of trying to lower your mortgage payment and you don’t qualify for a traditional refinance, you might be asking yourself this question.  If you’re tempted to skip a mortgage payment, consider the HARP program first.

What would happen if I miss a payment?

1)     Credit Score

•  Missing mortgage payments will be reported on your credit report after the first “30 day late”, and will continue to be reported as you miss more payments.  As this continues, it may result in a drastic credit score drop of over 100 points.

2)     Automobile Purchase or Lease

• Missing mortgage payments can also affect whether or not you are able to fulfill your plans.  If you lease a car ever 2 – 3 years, your credit score may not let you do so.

3)     Large Purchases

• If you plan on making a large purchase that requires financing, you may not be able to.  This might include items such as furniture, vacations, even business transactions can be affected.

4)     Credit Card limits

• If you are one who relies on credit cards and their limits, missing your mortgage payments will definitely hurt.  Having a large drop in your credit score may result in the credit card companies drastically dropping your spending limit, even canceling your card.          

Consider HARP – Home Affordable Refinance Program
[youtube http://www.youtube.com/watch?v=y7u36OGmgRo?rel=0&w=420&h=315]
 

REQUIREMENTS:

1)     Loan has to be owned by Fannie Mae or Freddie Mac

• Keep in mind Fannie Mae and Freddie Mac are not servicers, but rather, investors.  Your servicers are the companies that send you the statement at the end of the month.  For example, Citi Mortgage, Wells Fargo or Chase
• In order to be eligible for the HARP program, Freddie Mac or Fannie Mae has to have owned it since May 31^st 2009
• You can check if you have a Fannie or Freddie loan by clicking the logos on www.FreeModificationHelp.com . Make sure you fill-in your information EXACTLY the way it appears on your mortgage statement.

2)     Make sure the loan is 30 years or less in term.

• If the term exceeds 30 years, the Loan-to-Value must be less than 105%, or in other words, what you owe on the house can only be 105% of its value based on an appraisal.

3)     In the last year, you cannot have missed more than one payment and have been on time for the last 6 months with your payment.  There are also income and credit restrictions along with investor overlays.

Based on recent experience with this program and feedback from homeowners, I believe most homeowners will not qualify for this program. However, it’s a low risk option you want to explore before “taking the plunge” and missing payments.