When the recession hit, many home owners across the country turned to different programs to help them keep their homes. One program was the Home Affordable Modification Program. With this program, Florida homeowners were able to obtain a loan modification to reduce their interest rate and their monthly mortgage payment. But, that change was temporary, and some fear the rise in rates and mortgage payments may lead to another struggle for homeowners in Florida.
The temporary reduction was for five years for those who qualified for the loan modification program. Now, when that time runs out, the increase may offset the financial stability some have grown used to. One estimate states that mortgage payments for some can rise anywhere from $150 to $1,000 a month.
The interest rate changes could also pose a problem for homeowners who have been a part of the program. At the time when many people sought the loan modification, the median rate was 6.4 percent. The rate for the loan modification was reset to anywhere from 4 percent to just over 5 percent. The rise that could occur can offset financial progress made by homeowners who may not be expecting it.
As the economy recovers, the housing market in Florida and elsewhere has begun to pick up and grow in some areas. Thanks to the loan modification programs out there, many people who were on the verge of losing their homes managed to stay in them and avoid home foreclosure altogether. Anyone who may be affected by the temporary terms running out and a possible rise in payments may want to investigate their options and see what a loan modification or bankruptcy may mean for their homes and their financial outlook.
Source: pe.com, “Homeowners who got mortgage help brace for rate resets“, Debra Gruszecki, Oct. 17, 2014