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Chat Plus: Do You Have to Miss Payments to Get Help?

Here's one of the questions I couldn't get to during the latest Real Estate Live chat. The next online conversation is scheduled for Friday, July 24 at 1 p.m. As always, you can read the transcript or submit a comment or question early.

Ashburn: In order to qualify for a loan modification, do you need to be behind in payments or do you just need to meet the qualifications, that is your mortgage takes up more than 31 percent of gross monthly income, the loan balance is less than $729,000, and it was originated before Jan. 9, 2009, etc?

E.R.: No, you do not have to be behind on your payments to refinance through the government's Home Affordable Modification plan. In fact, to qualify you must not have been 30 days late on a payment within the last year. The rules were loosened recently to allow homeowners who are deeper underwater to participate.

If falling home values have made it so your loan amount is now up to 125 percent of your home's current value, you may be able to refinance to a lower interest rate. You can find all the details on the Making Home Affordable web site.

By Elizabeth Razzi  |  July 14, 2009; 6:00 AM ET
Categories:  Loan modifications , Mortgages  
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Comments

If I may disagree with E.R. She was asked whether you have to be behind in your mortgage payment in order to qualify for a modification. Her answer was:

No, you do not have to be behind on your payments to refinance through the government's Home Affordable Modification plan. In fact, to qualify you must not have been 30 days late on a payment within the last year. The rules were loosened recently to allow homeowners who are deeper underwater to participate.

E.R's answer applied to a refinance, which is different than a modification. For a modification you must be at risk of eminent risk of foreclosure, along with other qualifying factors, too numerous to mention in a comment.

Posted by: jerry24 | July 14, 2009 9:24 AM | Report abuse

Ah, yes, you're correct. Thanks for pointing that out. The questioner was asking about a loan modification rather than a refinance. For Ashburn, though, the refinance would probably bring some relief to the budget.

Posted by: Erazzi | July 14, 2009 10:45 AM | Report abuse

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