How The Making Home Affordable Program Can Help You

The Making Home Affordable Program was introduced by the Obama Administration as an attempt to stabilize the housing market. $75 million of government funding is devoted to preventing avoidable foreclosures under this initiative and the program is estimated to impact the lives of 7 to 9 million American home owners.

The program is divided into two main arms; the Home Affordable Refinance Program (HARP) targets home owners who are current on their payments but need help to decrease monthly installments, whereas the Home Affordable Modification Program (HAMP) is for home owners who have fallen behind on their payments and do not qualify for refinancing.

There are several stipulations attached to each program to help home owners determine which one better suits their needs. These stipulations are outlined below.

Eligibility for the Home Affordable Refinance Program (HARP)

You may be eligible for this program if;

1. You are up-to-date on your mortgage payments.
2. Your mortgage is held with either Fannie Mae or Freddie Mac.
3. The outstanding balance on your mortgage is not more than 125% of the value of your house.
4. You can prove you will be able to handle payments under the refinance. (To prove this you can get a letter of good faith from your current lender.)

It is important to note that signing up for refinancing does not guarantee that your monthly installment will decrease. The refinanced payment may be less if your current loan interest is substantially higher than the refinanced rate, but it may be slightly more or the same if your mortgage includes interest only payments but the advantage would be savings over the term of the loan.

Eligibility for the Home Affordable Modification Program (HAMP)

You may be eligible for HAMP if;

1. You are the owner of a 1-4 unit home with outstanding balances of less than
   1. 1 Unit: $729,750
   2. 2 Units: $934,200
   3. 3 Units: $1,129,250
   4. 4 Units: $1,403,400;
2. Your first lien mortgage was originated on or before January 1, 2009.
3. Your monthly mortgage is more than 31% of your gross monthly income.
4. You have proof of a financial hardship that hinders the payment of your current mortgage facility, such as job loss, health problem or other circumstance.
5. You are behind on your mortgage payments (although this is not a strict requirement as faithful payment of your mortgage does not necessarily disqualify you from this program).

Makinghomeaffordable.gov has a wealth of information on this program as well as more general information to help home owners understand how mortgages work.