Before browsing the time and expense of applying for a loan modification, you’ll be wondering what proportion money you will be ready to save on your monthly mortgage payments. That’s a good question.
Several Ways to Lower Monthly Payments
Because no two mortgage modification applications are alike, it’s impossible to predict what proportion your monthly payment is going to be reduced if your loan modification is approved. The answer will depend on several factors, including:
- Your lender and what company back your loan
- The amount of your mortgage and benefit of your home
- Whether you’re popular or due on your mortgage payments
- Your monthly income
For example, the Streamlined Modification Initiative, which runs July 1, 2013, through August 1, 2015, estimates that qualifying homeowners may lower monthly payments by 30 percent, on average. The program is open to homeowners who are between 90 days and 24 months delinquent on loans that are owned or backed by Fannie Mae or Freddie Mac. The loan must be at least 12 months old and the loan-to-value ratio cannot exceed 80 percent.
A report of the government’s Making Home Affordable program through February 2013 reports:
“Borrowers among a quick 2MP [Second Lien Modification Program] modification, including those with a partial extinguishment of their second lien, save a median $780, or 41% of their combined total first and second lien mortgage payment. Those who got a full extinguishment of their second claim should reduce their total monthly mortgage payment by a median amount of $1,047, or 53%.”