Making Homes Affordable Refinance: Will it Affect Your Credit Rating?

It is every homeowners’ worse nightmare, a financial crisis that may result in the loss of the family home. There is a solution, an alternative to foreclosure, and that is a modification to the mortgage loan. This depends on your bank and your loan insurer so before you investigate loan modification you should first make an appointment with your mortgage lender. This article outlines the usual expectations for those who hope to get a Chase Bank mortgage modification.

Many nationwide banks are stepping up their loan modification programs in order to help keep people in their homes. They will give you a fresh start by modifying the terms of your loan so you can make the payments. Past due amounts and penalties can be added to your principal balance and rolled into a new payment. Escrow payments can also be added in this way. Your financial history is not blemished by a loan modification. While late or missed payments will in fact show up on your credit report, a loan modification will not.

Of course, there are some standards that must be met before you are allowed to access this Making Home Affordable Plan. You must live in the home you own, your debt cannot exceed $729,750 and the loan must have been secured prior to January 1, 2009. Your current monthly payment must be more than 31% of your gross monthly income and you must not have had previous loan modifications. This is a very good plan and if you think you might qualify; find a HUD-approved financial counsellor who will be able to give you more information. The government is actively encouraging modification programs to help everyone by giving both the borrowers and lenders incentive payments.

If you are not insured through Fannie Mae or Freddie Mac, there is still hope. Chase Bank still offers modifications. It won’t be as good as the making homes affordable refinance plan since there is no government funding, but it is still better than foreclosure both for you and for your credit rating. Applicants must still be living in the home they own, and must be holders of a fist mortgage that has not been refinanced or modified earlier. The monthly payments, since government help is not a factor here, may be in the range of 31% to 40% of your monthly income before taxes. If you do meet these requirements, you will have to submit whatever paperwork Chase Bank requests. This will include a hardship letter, all financial records, your pay stubs and your tax returns.

Lowering your payments with a mortgage modification can be a positive step toward preventing foreclosure and improving your credit score, despite any initial drop, but you need to make sure that you’re not sending yourself too far back in the beginning when you sign on the dotted line.

Learn more about Obama Mortgage Relief Plan Qualifications.