Calculating Your Mortgage
For more information, please fill in the form below.
Ask the Servicer: What type of loan do I have? Fannie Mae, Freddie Mac, FHA, VA, or Conventional?
Mortgage amount = PITI = Principal, Interest, Taxes (monthly), and Insurance (monthly)
(Most modifications require taxes and insurance to be escrowed.)
Operation Restoration will check your numbers if you fill in the Operation Restoration worksheet. Fax or scan and email using information under Contact Us. Remember to fill in Gross and Net Income, one under the other.
See Notes below. Then click Mortgage Calculator.
For LENGTH OF LOAN IN YEARS, follow the instructions below.
For INTEREST RATE, follow the instructions below.
For LOAN AMOUNT put in what you owe (including the amount in default). Do not use a comma.
For ANNUAL PROPERTY TAX, put yearly property tax without a comma.
For ANNUAL INSURANCE, put yearly homeowner's insurance without a comma.
Click on CALCULATE at the bottom. You do not have to clear any fields.
RESULTS will show next to:
Monthly Principal + Interest
PROGRAM PRIORITY: Which programs do they look at first?
Fannie Mae and Freddie Mac loans go through the HAMP eligibility formulas first. See Step 4 Making Home Affordable lesson for how calculations/eligibility is done. For the Making Home Affordable program (HAMP) they have to be able to get the mortgage payment (PITI) down to 31% of Gross Income (take Gross and multiply by .31). Of course, if the payment is less than or at that already, then they will have to go to an "in-house" option (see Traditional Modification best practices).
FHA: There is a FHA HAMP version (see Step 4 here) that involves a "partial claim" (portion of principal balance is removed and placed as a balloon payment at the end of the loan period). You can follow the formula and challenge based on that formula (Step 4 here scroll down for FHA HAMP). If, however, they do not want to do a partial claim, the best alternative is to follow best practices identified in Step 4 of the Traditional Modification lesson. Remember, FHA will only extend to 30 years and the interest rate will be market rate (5.25 or so).
IMPORTANT: After you have used the Mortgage Calculator to calculate your payment, remember to then add back in PMI (private mortgage insurance).
VA: There is a VA HAMP version (see Step 4 here) but we do not see many of the VA HAMP modifications go through. The next best alternative is to follow best practices identified in Step 4 of the Traditional Modification lesson. Remember, VA will only extend to 30 years and the interest rate will be market rate (4.5 or so).
Conventional Loans: The way these are handled depends completely on the guidelines of the Investor. We have seen more of these modifications go through following the best practices identified in Step 4 of the Traditional Modification lesson, although sometimes the investor mirrors the Making Home Affordable formulas.
* If your loan is serviced by Ocwen, see highlighted section under Step 4 of the Traditional Modification .
** Best practices expressed in Step 4 of the Traditional Modification is based on an average monthly income (spreads may have to be a little greater in higher income brackets). Remember when you are using the Mortgage Calculator, after you add the back amount owed, keep in mind they are looking for affordability, the ability to make the modified monthly payment without risk of default. If the potential modified payment, added to your other expenses, does not show that you can cover all of your expenses, the modification will most likely be denied.
*** Outcomes on "in house" programs can vary. Varying factors: interest rate, length of loan in years, etc.
LENGTH OF LOAN IN YEARS
Fannie Mae and Freddie Mac can be extended 30 or 40 years depending on what is necessary to get the Total Payment (see above calculator) to 31% of the GROSS Income. (.31 x GROSS Income)
FHA and VA maximum is 30 years.
Conventional Loans, owned by other investors, can vary. Some investors will only use the remaining years on the loan (in other words they won't extend to 30 or 40 years). Some investors only extend to 30 years. Some will extend to 40 years.
Fannie Mae and Freddie Mac can go as low as 2% but will only reduce to the interest rate that will reduce the loan (PITI) to 31% of the GROSS Income (Multiply .31 x Gross Income to determine the .
FHA (market rate which varies, i.e. 5.25 or 5.50)
VA (market rate, i.e. 4.5)
Conventional Loans, owned by other investors, can vary. Some investors will mirror the HAMP program (will go to 2%) but the safest way to calculate is to use a middle of the road guess at 4.5, or better yet 5).
Rarely do we see principal balance reductions. (Ocwen has a program).
Rarely do we see FHA follow the HAMP version because of the necessity of a partial claim (see Making Home Afford lesson, Step 4). More often modifications go through using the Traditional Modification (See lesson, Step 4).
* Remember that your payment may not change, or may be higher given the fact that servicers place all missing payments at the end of the loan. If you have a year or more of payments in default, this can add up.
* Remember that trial modification payments do not necessarily reflect the actual modified payment. Be sure to do your own calculations and ask the servicer how they are calculating the payment, even if you have to get help from the executive area to obtain that information.
* Remember interest rate restrictions based on the type of loan.
> If the servicer denies your loan based on the 31% rule, ask: did you take the modification request through your in-house program?
> Always ask what formula they are using and calculate it yourself.
> Also ALWAYS check your numbers in their system because they are notorious for changing the numbers. Follow the scripts in the Making Home Affordable and Traditional Modification lessons.
> If you have trouble with the Loss Mitigation area, call the CHIEF EXECUTIVE OFFICER/ PRESIDENT directly and ask for help to escalate your case (you will be assigned a senior level representative that works for that office). Request the formula they are working with. Don't give up.