If you're in danger of losing your home, The Hope for Homeowners Program, made available through the Housing and Economic Recovery Act of 2008 (HERA), can help make your mortgage more affordable. Through the program your lender may volunteer to refinance your mortgage into a lower 30-year fixed mortgage and help reduce your mortgage payments.
Who Qualifies for Hope for Homeowners
The program is available for at-risk homeowners between October 1, 2008 and September 30, 2011.Program qualifications:
- The loan must have been originated on or before January 1, 2008 and you've made at least six payments.
- The loan must be on a home you live in. Investment properties and second homes do not qualify.
- You cannot own or have interest in a second home.
- Your mortgage payment must be more than 31% of your monthly income. (Divide your mortgage payment by your income, then multiply by 100.)
- You have not missed payments on purpose.
- You didn't receive the loan fraudulently and have not been convicted of fraud in the past 10 years.
- Your mortgage is less than $550,440.
How Does Hope For Homeowners Work
Hope for Homeowners allows certain homeowners to refinance their mortgages into government-insured mortgages through the Federal Housing Administration (FHA). The government works with your lender to reduce your mortgage to at least 90% of your home's current value, thereby reducing your mortgage payments. To determine your home's current value, it will be appraised by an FHA-approved appraiser.
The lender must also agree to refinance the mortgage into a 30-year fixed loan. The lender accepts proceeds from the program as settlement for any outstanding debt and agrees to waive your prepayment penalties and late payment fees.
The program is entirely voluntary. Neither lenders, investors, nor borrowers are required to participate.
What Does Hope for Homeowners Cost
You'll have to a 3% mortgage insurance payment upfront. Then, you'll make 1.5% mortgage insurance payment annually. You will also be responsible for the closing costs on the loan.
Your new interest rate will be based on current market rates and will be given to you by your lender. It may or may not be lower than your current interest rate. In any case, your interest rate will be fixed for the life of the loan, so your monthly mortgage payments will never change.
Save Your Home From Foreclosure
Find out if you qualify by contacting your lender, an FHA-approved lender, or a HUD-approved (Department Housing and Urban Development) housing counseling agency.