Mortgage Loan Modification Vs Home Affordable Refinance Program
A mortgage loan modification will typically provide much lower mortgage payments than the Home Affordable Refinance Program will. I am making an assumption that if someone would qualify for the HARP refi program they would not qualify for a mortgage loan modification. Hopefully this assumption is incorrect. If someone was current and their Loan to Value was below 105% then they would most likely qualify for the HARP refi program. If this person had a lot of other debt and recently reduced income they may not be able to afford a monthly payment at 5% interest. In this case a mortgage loan modification would be the best fit for this borrower even though they would qualify for the Making Home Affordable Refinance Program.
We are offering our clients a mortgage loan modification first no matter what if they have ANY kind of hardship. If they don’t get the loan mod then we will close a HARP refinance for them with no additional costs or processing fees. I think this is the best thing to advise borrowers since the HARP programs interest rates start at 5%. Floor rates for mortgage loan modifications are as low as 2% interest with a lowered payment no lower than 31% of gross monthly income.
Borrowers that have plenty of liquid assets or plenty of extra money left over at the end of the month will only benefit from the Home Affordable Refinance Program if the have a current interest rate at 6.00% or above based on current market rates around 5%.