The primary focus of HAMP and the way that more manageable payment sums are reached is by lowering interest rates. Those who are in receipt of Tier 1 interest rates will have a low repayment percentage of 2 percent. Note this figure may increase gradually, but it will never surpass the original market rate when the loan modification was agreed. The whole purpose of lowering interest rates is to make mortgage payments easier for homeowners to maintain, so they can build themselves and their families a better financial future. 
How Will a Tier 1 Modification Affect My Mortgage Repayments?
Generally speaking, the lowest rate of interest will be maintained for five years and then rates will increase in small increments in subsequent years, according to MakingHomeAffordable.gov. This will give you the first five years to effectively plan ahead and create a better financial standing that will help you to cope with increased interest rates and repayment amounts later. Interest rates will never increase by increments of more than 1 percent per month, which can be a great help for people who need the added security from sudden, large interest rate jumps.
Just like with a standard mortgage loan, making repayments is crucial. The program offers a range of help including access to trained counselors that can help you to budget effectively in order to meet the set monthly repayments, and you can find out more information regarding buying, renting, foreclosures and answer other housing questions you may have.
What Other Help is Available?
New participants of HAMP get free access to comprehensive counseling. Counseling is not exclusively for new participants – those who are having clear difficulties can also be helped later in the program. Your mortgage lender can help you with locating a HUD-approved counselor or alternatively, visit the government’s Making Home Affordable website to discover the nearest approved agency.
The key is to be proactive about improving your financial help and having someone to guide you through the process of rebuilding your credit rating and strengthen your understanding of your own finances. This will help you avoid making further financial errors.
What Information Will a Financial Counselor Need?
To help you manage your Loan Modification, a financial counselor will need access to information regarding your mortgage repayments, and typically providing monthly statements will be enough. Other financial documents include balances and statements of bank accounts, credit card statements, income tax returns and monthly income statements.
If applicable, you may need to provide a counselor with information regarding the circumstances surrounding your need for participation in the HAMP. Paperwork regarding loss of job, divorce, medical issues or whatever your situation is can all be helpful to a counselor.
The Home Affordable Modification Program is an official government program specifically designed to help homeowners who are impacted by sudden or prolonged financial hardship. The HAMP program modifies your mortgage repayments to make them more affordable by ensuring that payment figures will account for less than 31 percent of your monthly pre-tax income. Eligible homeowners will have their original mortgage terms permanently changed to a more manageable sum.