What Are Mortgage Assistance Programs?

Owning a home can be a great source of pride and accomplishment, but it’s also a huge responsibility. In addition to taking care of all the plumbing and roofing issues, you also have to worry about that monthly mortgage payment and all the interest that’s added to your loan every day. It’s easy to get behind on payments or to owe more on your house than it’s actually worth, especially with a sluggish economy. Thankfully, there are many federal, state, and private mortgage assistance programs out there to help relieve some of the stress and financial burdens of owning a home.

Where Can I Find a Mortgage Assistance Program?

Whether you’re struggling to make your mortgage payments or you’ve already fallen behind, you can often work directly with your mortgage servicer to develop a better payment plan, reduce your interest rate, or waive certain fees. It’s in the lender’s interest to work with you as much as possible in order to avoid the hassle and costs of foreclosure.

Mortgage assistance programs are also offered through state and local governments. These programs offer services to local homeowners according to state laws, and include assistance such as refinancing, mediation services, loan counseling, financial aid, free legal counseling, and foreclosure postponement.

Some mortgage assistance programs, such as the Home Affordable Refinance Program (HARP), are administered by the federal government through the Department of Housing and Urban Development (HUD). While some federal programs expired at the end of 2016, others continue to offer assistance depending on how far behind you are on your payments, whether your situation is temporary or permanent, and whether you’re unemployed, in the military, or disabled.

What Types of Mortgage Assistance Are Available?

There are a number of different forms of mortgage assistance that may be available to you, depending on your particular situation. Below, you’ll find information about key types of assistance.

Modify or Refinance

One common type of mortgage assistance if you’re struggling with your payments is loan modification. This is a permanent change to your loan achieved by lowering your monthly payment amounts, reducing the total amount of your loan, extending the number of years you have to pay off the loan, or obtaining more favorable interest rates on your mortgage. Similarly, you can often obtain more favorable loan terms by refinancing your mortgage – that is, using a new loan to pay off an existing one.

Financial Aid

Another helpful form of mortgage assistance is direct financial aid. These programs may provide assistance through grants, interest free loans, or by waiving certain fees, charges, or even a second mortgage or equity loan.

Loan Forbearance

If you’re trying to avoid foreclosure, your lending company may also allow for a temporary reduction or suspension of your monthly payment, called a “forbearance.” After the forbearance period, the lender may also provide you with an affordable payment plan to pay back the missed amounts.

Unemployed Homeowners

If you’re unemployed or underemployed, some mortgage companies and programs will help you defer your payment or make partial payments while you look for permanent employment. For example, California’s program provides unemployed homeowners with up to $3,000 per month for as many as eighteen months. Although the interest on your loan continues to accrue, this temporary option provides some relief while you get back on your feet, and it may help you avoid losing your home.

Foreclosure Postponement and Mediation Programs

Some state laws and programs provide for a postponement or slowdown to the foreclosure process. This postponement encourages lenders and borrowers to work together, often through mediation, to implement a feasible plan that helps avoid foreclosure.

Hardest Hit Fund

The federal government has also set aside funds to help certain parts of the country that were hit especially hard by the housing crisis. This fund helps low and moderate income homeowners reduce their loan amounts, obtain mortgage assistance while unemployed, or help transition to new housing after a short sale, among other potential benefits.

Get Help Avoiding Foreclosure

The thought of losing your home after investing so much in it is a nerve-wracking prospect. But most of us experience financial set-backs at one time or another, and these set-backs can often lead to mortgage trouble and even foreclosure. Get back on track with your mortgage by contacting an attorney who specializes in foreclosure alternatives. A skilled attorney will be able to discuss your legal options with you and help you decide on the best course of action moving forward.