The Obama loan modification program requires homeowners to calculate the current mortgage payment for the HAMP application. Approval for the HAMP trial modification is largely based off this portion of the application. Thus it is very important that you know how to calculate your current mortgage payment for the HAMP application.
To calculate this figure simply assign values to each of the variables listed below and the sum will be your current monthly payment. You can then compare this figure to the hopefully lower monthly payment you would get through the loan modification. For info on how to get to that figure please see the resource below.
Current Mortgage Payment According to HAMP
The Obama loan modification program defines your current mortgage payment as all monthly mortgage related expenses. This includes insurance, taxes, and even homeowner association fees.
5 Variables – Calculating Current Mortgage Payment for HAMP
To calculate the current mortgage payment for your HAMP application please simply determine and add the following variables.
1) Principal & Interest
These two variables change with every payment. Thus to avoid confusion should be calculated as one variable. You can find this on your last non late mortgage statement
The principal amount is the amount of your mortgage payment that pays down the actual balance of the loan that was originally borrowed. This amount increases with each month. The interest you pay on your mortgage is based on the loans APR. If you have an adjustable rate mortgage, also abbreviated as ARM, then this figure will fluctuate. The amount of interest you pay will steadily decrease over the life of the loan. However if you have an ARM then this may not always be true.
2) Property Tax
You most likely have to pay a property tax. This is generally collected by a lender and then deposited into an escrow account where it will sit until the next property tax payment is due. At this time the lender will make the payment on your behalf.
The best way to calculate this portion of the monthly mortgage payment is to determine your annual property tax amount and then divide that figure by 12. We recommend doing this as opposed to simply looking on your mortgage statement because lenders often do not collect the property tax amount equally over 12 months.
3) Hazard Insurance
Much like property tax, hazard insurance is often collected by the lender and either deposited into a escrow account or paid to the insurer. The best way to calculate this figure is to get the annual amount and then divide that figure by 12.
4) PMI – Private Mortgage Insurance
You may or may not have PMI coverage on your loan. If you have a government backed mortgage then you do not have PMI coverage. If you made an initial 20% down payment on the loan then you most likely do not have PMI coverage.
Mortgages with private mortgage insurance – PMI coverage are generally subprime loans that were loaned to a borrower who did not make the typical 20% down payment. If you think you have 20% or more in home equity then you should cancel your PMI policy.
5) Homeowner Association Fees
Homeowners often have homeowner association fees that they must pay monthly. This expense needs to be included in your current monthly mortgage payment calculation
After you have accurate figures for all the above variables simply combine all the amounts and the resulting figure is the current monthly mortgage payment that you need for the HAMP application.
This finance blog has lots of other great mortgage help resources. Many of these helpful resources pertain directly to this program. Be sure to check out some of the related content below.