Quote:
Originally Posted by weneedhlp  Through the MHA plan, if we cant afford the payment at the 31% of our income and we can afford the payment if our rate was 2%, will our lender let us go do to 2% to still comply with the MHA plan. Or is 31% the lowest payment allowed? |
The goal of the MHA plan is to lower your payment down to as close as possible without going under to 31% of your gross monthly income. The process to reach this target is a three step approach called the standard waterfall.
Step 1 - reduce the interest rate to as low as 2% (this would be in place for the first five years, and gradually increase by 1% each year until the Freddie Rate is reached that was in place when the modification took place...the current Freddie Rate is 5.1% so that is what it would cap at)
Step 2 - extend the loan term to as much as 40 years
Step 3 - forbear principal (this is a portion of the loan that is deferred and bears no interest but is due as a balloon payment when the loan term is reached or the home is refinanced or sold).
If the goal of 31% cannot be reached through these three steps, then the loan mod would not satisfy the program requirements. If you are just looking for a 2% fixed, then by all means, ask your bank if this is workable for you.