Reduce your Mortgage Balance

Reduce your Mortgage Balance

The Hope 4 Homeowners (H4H) program is aimed at helping homeowners that have found themselves owing more on their mortgage than their home is worth. The lower monthly mortgage payment is the result of the program reducing the principal balance of the current mortgage.

How will it Help?

The Hope for Homeowners program puts the homeowner into a mortgage based on their home’s current value. A Hope 4 Homeowners’ loan will be 90% of the current value of the home. Not all aspects of this program are positive. The Federal Housing Administration (FHA) and your current lender will share in any profits of the house when the homeowner sells their home. This offsets the balance that has been forgiven. {The reduced loan amount results in a lower montly payment}.

Take a Look:

Let’s say that your current mortgage balance is $400,000 and your home is now worth $250,000. There are millions of homeowners that find themselves in this scenario. You are currently making a mortgage payment on a loan that is much greater than the value of your home. The Hope to Homeowners loan will issue a new loan that is equivalent to 90% of the home’s current value. $225,000 is the new loan mortgage balance in this scenario. That is a reduction of $175,000 in the principal balance of your mortgage. The new mortgage payment will be based on this new loan amount of $175,000.

I want to Calculate the New Payment?

There are benefits beyond the principal reduction in your mortgage. The Hope to Homeowners loan payment will also be reduced. Let’s say the current mortgage is $400,000 at 6% on a 30 year fixed (the benefits are even greater if you are in an adjustable rate mortgage). The current payment is $2,398. The interest rate will often be reduced but for this example lets assume that it is not. Payments for the Hope for Homeowners loan for this example are $1,348. The mortgage payment is reduced by $1,050 monthly. There are obvious benefits.

There are some qualifying factors that homeowners need to understand. Every homeowner should do their own research into this program to be sure that it makes sense for your scenario. You need to realize that there are some negative aspects of this loan. You may give up some of the equity that your home builds when you sell your home. Americans will be able to keep their homes with this program. The H4H program can and will provide some much needed hope to homeowners that are upside down on their mortgage.