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Avoiding foreclosure, but at what cost?
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The HOPE for Homeowners program recently introduced by the government has been touted as a way for homeowners to save their homes and avoid foreclosure. And it is, for those homeowners who qualify for the program.
But in an interesting article in The Washington Post on Sunday October 19, Michelle Singletary points out that while the program definitely does what it says by allowing homeowners to stay in their homes, this too is a costly mortgage deal.
Singletary reminds consumers of their obligation to read the details of the HOPE program, which splits your home equity with the government. If you agree to this government assistance program, writes Singletary, "you have to split the initial equity created by the write-down of the mortgage with the FHA. The government also gets a 50% cut of any appreciated value for as long as you own the home - even after you pay off the mortgage."
Other rules of the program bar homeowners from taking out a second mortgage unless the money is used to maintain the property, and make homeowners pay a 3% upfront mortgage insurance premium and a 1.5% percent annual mortgage insurance premium.
In other words, read the fine print and make sure this program is your best option. Sometimes dealing directly with your lender can result in a better loan program.
Disclaimer: Consult your lender or other real estate or financial professionals before making any decisions related to your loan.
