Florida Homeowners Look at HAMP, Short Sale

Florida homeowners are looking at all the options available before they face foreclosure. Two of those options are HAMP and Short Sales.

The Home Affordable Mortgage Program (HAMP) is a loan modification program available to homeowners who fear they may lose their homes to foreclosure. HAMP is one of the programs available through the U.S. Government program – Making Homes Affordable (MHA). HAMP is one of several available loan modification programs designed to help homeowners permanently lower their monthly mortgage payment.

We have all become far too familiar with both the terms pre-foreclosure and foreclosure. The housing crisis hit a large percentage of homeowners. People who never thought they might lose their homes were facing job losses or financial hardships, which made making a mortgage payment extremely difficult.

Foreclosure is a process by which the lender notifies the owner of the property of their intent to legally take possession of the property due to non-payment. Along with foreclosure comes the stigma of losing your home and relocating your family to a rental property.

Loan modifications are pre-foreclosure programs. Pre-foreclosure is a term used to describe a situation where foreclosure is imminent. Homeowners may be facing financial hardship due to divorce, job loss, death or illness.

Loan Modifications Have Conditions

The HAMP program requires a trial period to see if the homeowner can actually make the modified payments. During the trial period, the terms and conditions of the original loan do not change. The loan is permanently modified when you successfully complete the trial period.

In addition to the trial period, there are some things to note. Some consumers are under the impression that HAMP reduces the principal of the loan. This may not be true. In many cases, adjustments are made in the interest rate and the length of the loan to make it more affordable, but in the end, it may end up costing you more money throughout the life of the loan.

The Pros and Cons of HAMP vs. Short Sale

So which is better – HAMP or a short sale? There is no one answer that fits every individual so consider every potential benefit and pitfall in both. The ultimate decision involves the homeowner’s financial situation as well as their ability to continue to make payments.

Some people absolutely must get out from under their mortgage entirely, so a loan modification may not be a solution for them. Others may want to make every effort to stay in their home so it makes sense to consider a program like HAMP.

If you are considering a HAMP loan modification, seek professional guidance. There are many potential areas of misunderstanding such as escrow accounts, interest rate changes, forbearance, balloon payments, etc. It helps to remember that a loan modification program just changes the repayment terms. It is still a loan.

If you worry that HAMP may not be right for you, contact Short Sale Facilitators of Casselberry Florida to see if you qualify for a short sale. Alma Korshak will discuss the process of the short sale with you so you can make an informed decision about what is right for your family.

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