Mortgage always expects documentation. This is an expectation of lenders for quite some time now. If you want to secure a mortgage, you’d best prepare for it.

These requirements are quite specific and highly important. It is necessary if you want the lender to prepare the right papers that prove both your income as well as your assets. However, you should make it a practice to prepare such documents way in advance. Doing so will save you a lot of time and effort.

To begin, you must compile every little bit of information about your bank accounts. This also includes account numbers as well as the addresses of the branches. Take time out to prepare copies or duplicates of all your most recent statements. Do not forget to add the vital information regarding your savings and checking accounts! Additionally, you should also prepare the statements of these other things: liquid assets (for example, IRA retirement accounts), annuities, CD’s, as well as life insurance policies’ estimated cash values. It also would not hurt to prepare the valuations of your non-liquid assets like real estate or other valuables.

Your next step would be to create a documentation of your income. This is easy to do for as long as you have got the following: recent tax returns, W-2 withholding forms, and pay stubs. If you are of the self-employed status, you should also prepare the audited income statements for your business. Lenders usually do not need data spanning back to more than two years, but there might be cases wherein they will need to ask for additional information. If you find that your creditworthiness is already established, then it really pays to present the timely payment of your utilities and rent for the past one to two years. Lenders might also ask to see your legal documents like divorce papers to establish if there are any types of liabilities that may come up.

Before the housing meltdown, it was far too easy to get a loan that is competitively priced loan minus the need to provide any of the documentation mentioned above. They might now be very stringent in the past but over time these lenders ended up loosening their requirements. This then led to what is known as lender complacency, and as such there is a resulting proliferation called liar-loans. These are known as mortgages which do not need any sort of documentation, if at all.

There are cases wherein you might still need to get these loans, and lenders will recognize statements of income and assets (compared to just verified forms). Still, you might be able to expect a complete spread of full and complete documentation loans to be much higher than ever before. Based on one recent report, borrowers who are not as documented ended up defaulting more often than those who provide documentation and therefore end up causing a ruckus in their mortgage applications. Some even fail to push through with the process as a result.

Obviously, documentation is necessary. No one can push through in its absence. Thus, you definitely have to see to its preparation.

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About the Author:
Rob K. Blake, mortgage expert and author, educates mortgage shoppers on finding local providers by state like Delaware Mortgage Brokers and Lenders and provides reviews of national companies like Amerisave Mortgage.
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The Obama administration generated a simplified loan modification program that aims to reduce homeowner’s monthly mortgage payments based on their monthly gross income. There are two types of programs under Obama’s plan: The Home Affordable Modification Program and Home Affordable Refinance Program for mortgage refinancing.

How will Obama’s Loan Modification Plan Work?

• Servicer will reduce monthly mortgage payments of the borrower to not more than 38% of borrower’s monthly gross income.
• The government will assume part of the principal amount and manage other cutbacks to hit threshold of 31% on the borrower’s monthly gross income.
• When 31% is achieved, the borrower enters trial period for 3 months.
• If the borrower succeeded in paying timely mortgage payments during the trial period, a new fixed rate will take effect for the new modified loan that will run for 5 years.
• Benefits such as cash incentives are thrown in to lure lenders/investors, servicers to join, and for borrowers to pay on time from trial period until the term ends (5 years).

Who can qualify for Obama’s Home Affordable Modification Program?

• Only owner-occupied homes are eligible.
• Applicant must satisfy the Front-End Debt to Income (DTI) ratio of 31% to the monthly gross income set by the program. Total PITIA (principal, interest, taxes, insurance) and HOA (excluding mortgage insurance premiums) must hit this threshold.
• Applicant must satisfy the Back-End Debt to Income ratio of less than 55% to the monthly gross income which is the monthly total debt payable (eg, credit cards, car payments, student loans, etc.).
• Homeowners that have limited liquid assets and serious substantial income loss.
• Loan initiated on or before January 1, 2009.

Home-owners with unpaid principal mortgage balance equal to the following:

• 1 Unit: $729,750
• 2 Units: $934,200
• 3 Units: $1,129,250
• 4 Units: $1,403,400

Take note that the mortgage applied can be modified under this program only once. Your untimely records of delinquent balances will also be waived. If faced with foreclosure, proceedings will be temporarily suspended while undergoing the trial period. Should the applicant fail, foreclosure measures will resume. This is a charge-free program. New borrowers will be accepted until Dec. 31, 2012. Timely mortgage payers are automatically disqualified from this program.

What To Prepare If You Qualify For Obama’s Mortgage Plan And How?

• If employed, you must present substantial documents to validate income loss, such as, recent pay slips and income tax return.
• If self-employed, third party documents for profit and loss statement must be provided.
• Substantial information of assets.
• Account balances on all monthly payments and monthly housing expenses, such as, credit cards, student loans, second mortgage, insurance and taxes, etc.
• HUD-counselor approved document that states counseling commitment must be submitted. Only then shall the loan modification take effect.

It is advisable to collect and present all these to the loan servicers for initial assessment. They can help you determine early if you can be considered for a loan modification.

What Are The Benefits Of Obama’s Loan Modification Program?

If you qualified for Obama’s loan modification modification, the following benefits will take effect:

• Servicer Incentive Payment of $1,000 is paid to the servicer for every eligible loan modified.
• Pay for Success fee of $1,000 additional payout each year for three years to the servicer if the borrower pays timely from trial period of three-months until term ends. A fixed rate for five years will take effect after trial period.
• Pay-for-Performance Success Payment of $1,000 is given to the borrower each year for 5 years which will be redirected to the principal amount provided that borrower follows program guidelines.
• For every successful modification, a one-time incentive of $1,500 and $500 shall be given to lenders/investors and servicers, respectively. A successful loan modification means that the borrower completely made timely mortgage payments during programs term.

Who can qualify for Obama’s Home Affordable Refinancing Program?

• Home being refinanced must be a primary residence.
• Current loan must be secured by Fannie Mae or Freddie Mac. Contact them at 1-800-7FANNIE, or 1-800-FREDDIE to inquire or log on online at http://www.fanniemae.com/homeaffordable.
• Applicants must have current and timely mortgage payments for the last 12 months.
• First mortgage payable must not exceed 105% of your home value.
• Must have a stable income.

Note that, mortgage refinancing will be at fixed rate for 15 or 30 years. The interest rate is based on the market rate upon closing. No prepayment penalties will be charged but, applicant will pay for fees related to the mortgage refinancing.

If you are financially incapacitated while indebted to a home of diminishing value, you probably will not qualify for Obama’s loan modification programs.

Get your Free Do It Yourself Loan Modification Kit. loan modification kit includes everything you need to complete a loan modification on your own. It will teach you how to negotiate with your lender and most importantly what NOT to say to your lender. The secret to a successful loan modification is how you present your case to the lender. This DIY loan mod kit will explain the loan modification negotiation process in explicit detail.

Visit our website for How to articles, mortgage calculators, free sample hardship letters, foreclosure timelines, and dozens of informative articles on loan modifications and foreclosure. Stop by to check out our growing library of free financial kits. We currently have bankruptcy kits, credit repair, and loan mod with more on their way!

FreeDIYkits “Helping Homeowners Help Themselves”

Article Source:http://www.articlesbase.com/mortgage-articles/obamas-loan-modification-mortgage-refinance-plans-1470951.html

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Please Note... All links within articles are placed by their author-owners and not by this blog.Products with in those links may or may not be the best in the world.If it sounds too good to be true it could be a scam.Articles are posted for their info,ideas and or entertainment value only.

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