Obama's Home Loan Modification Plan: Do You Know If You're Qualified?

If you are going through financial hardship and are unable to afford your monthly mortgage payments, Obama's home loan modification plan could be the answer you're looking for to help stay on your feet. More families are going through financial hardship than ever and many have to leave their homes due to the loss of a job or the rising prices of general living expenses paired with bills. If it seems like you are in a financial situation that has no way out and you are on the verge of foreclosure with your home, ask yourself these questions:

1. Did you secure your mortgage prior to Jan. 1, 2009?
2. Is the mortgage you are having difficulty paying below $729,500?
3. Do you live on the property that you are having difficulty keeping up payments with?
4. Can you collect all of your documents pertaining to your income and tax returns?
5. Can you verify that you are in genuine financial hardship?
6. Is your household debt over 55 percent of your total income? And if so, are you willing to seek financial counseling?
7. Is your credit in good or decent condition?
8. Have you been late on your mortgage payments?

If you answered yes or maybe to questions 1 to 6, you may be eligible for loan modification under Obama's home loan modification plan. If you answered no to answers 7 and 8, some lending institutions may or may not come to a loan modification agreement with you. Lenders also look at your past mortgage payment and bankruptcy history to determine whether you are eligible or not.

The questions above are based on the guidelines that Obama home loan modification program instated. A large percentage of the American people are a solid "Yes" all down that line of questions, and that is why the Home Affordable Modification Program was created: To assist millions of Americans in keeping their homes through modifying their existing mortgages instead of having to take out second mortgages or move out of their homes.

Besides the assistance Obama's home loan modification plan provides homeowners, it also provides an incentive to lenders to accept loan modification agreements: For a successful loan modification agreement, the lending company receives $1,000 at the end of the year for three years as long as the borrower pays their mortgage on time every month. This must be done to encourage lenders to accept loan modification agreements, since the agreements reduce the amount of money they get from borrowers. Loan modification lowers the monthly mortgage payments for homeowners, as well as reducing the overall interest rate in most cases. If not for the incentive, lenders would be taking a simple loss and would be far less receptive to Obama's home loan modification plan and loan modification for homeowners in general.