Reduce Mortgage Payment: 3 Loan Modification Scenarios

February 25th, 2009 by michael e. riley

Refinancing Under New Housing Plan can be confusing. Below examples provided by the US Treasury Department will help you understand the new Homeowners Affordability and Stability Plan (HASP). Find out if you can refinance or lower your mortgage under the new plan.

Family A: Access to Refinancing

  • In 2006: Family A took a 30-year fixed rate mortgage of $207,000 on a house worth $260,000 at the time. (The family put just over 20% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%.
  • Today: Family A has about $200,000 remaining on their mortgage but their home value has fallen 15 percent to $221,000.
  • Their “loan-to-value” ratio is now 90%, making them ineligible for a Fannie Mae refinancing.

Under the Refinancing Plan: Family A can refinance to a rate of 5.16%. This would reduce their annual payments …

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