In attempts to pull the economy out of the recession and attack the mortgage crises the federal government recently passed Obama refinance mortgage plan . The administration has dubbed this the "Making Home Affordable" initiative and it has two main parts. One is aimed at wise but "underwater" homeowners who would like to refinance into a lower rate, and the other at borrowers facing financial hardship who are seeking a way to lower their monthly mortgage payments. Both programs are limited to borrowers who live in their homes, owe no more than $729,750 and fully document their incomes. The programs are effective immediately and this, along with historic low interest rates, can make refinancing your home a very attractive decision.

However, out of an expected 4 million homeowners who qualify only 175,000 have been accepted for loan modification so far. The one thing that many people fail to prove to their lender's is that once their home loan has been modified, that they will be able to meet the terms of of their new mortgage agreement! This is, of course, of utmost importance to your lender. No mortgage lender will be willing to help a borrower who has fallen behind with their payments, if they are simply going to default on their new agreement.

So how can you prove that you should qualify for modification of your mortgage? You will be required to provide a financial hardship letter. You will need to convey the following within in your letter: Why you fell behind on your original mortgage contract. The fact that you recognize that you didn't keep to the terms and conditions of your original agreement and what you intend to do to make sure it won't happen again.

You will also need to state that it won't happen again and prove why as well. Provide all details of your monthly income. Provide all details of your monthly outgoings. The final outcome of Obama's Modification of Mortgage plans are to reduce your payment to a maximum of 31% of your monthly income. This will be achieved by either reducing your loan interest rate or extending the term of your home loan…or both!

Always make sure that you are honest and upfront in dealings with your lender and accept your past mistakes. By showing this level of responsibility and the fact that you wish to make amends can help to get you pushed to the front of the queue! If you desperately need to lower your mortgage repayments and don't have up to $5000 to start the process, then you need to take advantage of a DIY Mortgage Loan Modification Kit today.

Learn more about Obama Mortgage Relief Plan Qualifications.