Things to Know

• The most important thing to understand about mortgage payment reduction plans is that the total amount of the individual's mortgage payment should be no more than 31 percent of their pre-taxed monthly income. This is a standard requirement for mortgage reduction programs, so if you don't meet this standard, you will likely not qualify. That means that if you make $3,000 a month before state and federal taxes are taken out of your paycheck, your monthly mortgage payment can be no more than $930 a month. Payments made to a second mortgage are not included in these figures. Taxes and escrow should only be included in these figures once. When figuring your total monthly mortgage payment, you should include both the principle and interest of your monthly mortgage payment (on the first mortgage only), insurance, property tax payments and any monthly homeowners association dues that are paid. If your monthly mortgage payment makes up more than 31 percent of your gross monthly income, you may not qualify for different mortgage help.
  
  

Researching Your Loan

• Even though your home mortgage is most likely through some sort of lending institution, such as a bank or a credit union, the loan is probably actually owned by another organization. Only loans that are owned by Fannie Mae or Freddie Mac are eligible for a Home Affordable Refinance program. Check with your bank or credit union to find out where your homeowner's loan originated from or use the Fannie Mae or Freddie Mac loan look-up websites to search your home loan. You can also call Fannie Mae or Freddie Mac directly to find out more information.
  
  

What to Look For

• It's important to get your information from a reliable source. Unfortunately, there are a lot of misleading websites. Such websites promise mortgage payment reductions but aren't as legitimate as they first seem. It's important to go through your lender directly and ask them about payment reduction programs or work directly with Fannie Mae or Freddie Mac. Be careful of e-mails that arrive in your inbox out of the blue, as these may be phishing e-mails to gain privileged banking information.
  
  Some things to beware of are whether the institution offering the payment reduction plan is asking for a fee up front. Homeowners who are attempting to go through an institution other than their lending institution should also be wary of signing away their home ownership rights. Most lending institutions will offer programs to avoid foreclosure. It may be hard for some people to believe, but banks and credit unions do not want to foreclose on a home. This is not profitable for them, so if they can help someone keep their home, they try.
  
  Not all companies who charge an up-front fee are out to scam people, but do your research regarding the company and check with the Better Business Bureau by either visiting their website or giving their 800 number a call. They should be able to provide you information about whether or not the company in question has been involved in any previous scams.