Chase borrowers looking to lower their mortgage payment may be eligible for help with the federal HAMP program. Named Home Affordable Modification Plan or HAMP, this government subsidized loan workout plan aims to modify existing home loans for qualified borrowers so that a more affordable mortgage payment can be offered. The goal is to stop the flood of foreclosures and encourage homeowners to keep making their mortgage payments. What does it take to qualify for this government rescue program? Here is some detailed information to get your started.

What is debt ratio anyway? One of the most critical factors used to determine who will qualify for the Chase federal HAMP loan modification program is called debt ratio. This is a term that refers to the amount of monthly income a borrower spends on their housing expenses. Obviously, if you have a high debt ratio, then most of your money each month is going towards making your mortgage payment and you could find yourself struggling to make ends meet. This has caused many homeowners to fall behind, especially if a loss of income or unexpected expense comes along.

Target Payment-how to find it: The Chase federal HAMP program is designed with a target modified payment that equals a 31% debt ratio-that is very low as it means that just 31% of your gross (before taxes) income is going to be allocated for your entire housing expense. This includes principal & interest, as well as property taxes, homeowners insurance and any homeowners dues. The goal is to provide a very low affordable payment so that the borrower will not be at-risk of default in the future.

How is this target 31% debt ratio calculated? Well, take the total gross monthly income and multiply that figure by 31. Then take that number and deduct your monthly property taxes, homeowners insurance and any homeowners dues. What is left is your new target principal and interest payment. Is that number affordable for you? If so, then it may be worth applying for the federal HAMP loan modification program with Chase.

Standard Modification Terms:  Next, your Chase loan must be able to be modified by reducing the interest rate or extending the loan term to reach that new target payment. If this can be done using the standard methods, then you could be a good candidate. Don’t worry-you can use a software program that is designed just for homeowners to figure all this out for you. Simply input your own specific income and expense and it does all the calculations for you. Your debt ratio, target payment, new interest rate and disposable income are all figured automatically. You can see immediately if you have a good chance of meeting the approval guidelines and where to make adjustments your loan modification application.

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