Home Affordable Modification Frequently Asked Questions |
| |
| The following are examples of ways the Home Affordable Modification Plan can help make your mortgage affordable. These are examples and are not intended to indicate the exact results you can expect if you qualify for this plan. |
| |
| GMI = Gross Monthly Income |
| PITIA = Principal, Interest, Taxes, Insurance and Association Fees |
| DTI = Debt to Income Ratio |
| |
Example 1: Rate reduction to achieve 31% DTI |
| |
| GMI |
$ 4000.00 |
| 31% GMI (Target Monthly Payment) |
$ 1240.00 |
| Loan $200,000 @ 7.5% 30 years |
$ 1398.43/month |
| |
|
| Taxes and Insurance |
$ 250.00/month |
| PITIA |
$ 1698.43/month |
| |
|
Modify rate to 4% to achieve a DTI of appx 31% |
| |
| Modified Rate to 4%: |
$ 954.83/month |
| |
|
| Taxes and Insurance: |
$ 250.00/month |
| New Payment |
$ 1204.83/month |
| Savings |
$ 493.60/month |
| |
|
|
| Example 2: Rate reduction and extending term of loan to 35 years to achieve 31% DTI |
| |
| GMI |
$ 3000.00 |
| 31% GMI (Target Monthly Payment) |
$ 930.00 |
| Loan $200,000 @ 7.5% 30 years |
$ 1398.43/month |
| |
|
| Taxes and Insurance |
$ 250.00/month |
| PITIA |
$ 1698.43/month |
| |
|
Modify rate to 2%. Modify term to 35 years to achieve a DTI of appx 31% |
| |
|
| Modified Rate to 4%: |
$ 662.53/month |
| |
|
| Taxes and Insurance: |
$ 250.00/month |
| New Payment |
$ 912.53/month |
| Savings |
$ 785.90/month |
|
| Example 3: Rate reduction, term extension and principal forbearance to achieve 31% DTI |
| |
|
| GMI |
$ 4500.00 |
| 31% GMI (Target Monthly Payment) |
$ 1395.00 |
| Loan $450,000 @ 9.0% 30 years |
$ 3620.80/month |
| |
|
| Taxes and Insurance |
$ 250.00/month |
| PITIA |
$ 3870.80/month |
| |
|
Modify rate to 2%. Modify term to 40 years |
| |
|
| Modified Rate to 2% for 40 years: |
$ 1362.72/month |
| |
|
| Taxes and Insurance: |
$ 250.00/month |
| New Payment |
$1612.72/month |
| |
|
| Because lowering the rate to the maximum floor of 2% and extending the terms of the loan to 40 years still does not achieve the desired DTI of 31%, the lender, at its discretion can elect to forgive or forebear a portion of the principal to achieve the 31% DTI. In this example the lender elects to forbear $75,000 of the principal which would be due as a balloon payment at the end of the term of the loan or if the home were to be sold. This is not expected to be a common practice and would most likely be used in an instance where the borrows suffered a loss of income and the home suffered a sharp decrease in value. |
| |
|
Modified Rate to 2% for 40 years on calculated on $370,000 |
$ 1135.60/month |
| |
|
| Taxes and Insurance: |
$ 250.00/month |
| New Payment |
$ 1385.60/month |
| Savings |
$ 2485.10/month |
| |
|
