Archive for the ‘Real Estate’ Category
Loan Modification – What Really Happens?
June 15th, 2010 | 
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The housing market is a mess right now. Millions of Americans are unable to make their mortgage payments. When a mortgage goes unpaid for too long, then a foreclosure follows. This hurts the housing market more because every foreclosure drags the cost of homes down lower and costs lenders even more money. To answer this problem homeowners can now seek and receive a loan modification. But what happens with a loan modification?
First of all, the entire point of a loan modification is to lower a monthly mortgage payment so that it’s more affordable. This is done by one or more of the mortgage terms being changed. The loan modification has to be agreed upon by both the lender and the mortgagee. However, there are certain criteria that must be met in order for a mortgagee to qualify for a loan modification.
Three of the biggest conditions that must be met are:
1. The homeowner has to demonstrate a hardship that resulted in an inability to pay the monthly mortgage payment. There are many different types of hardships that qualify.
2.The mortgagee has to prove that the new monthly payment obligation set forth by the loan modification is affordable and can be made on time.
3.The current home has to be worth less than the current amount of the mortgage. With the crash in the value of homes, this is the case for millions of Americans.
Unfortunately, once a homeowner falls behind with a couple mortgage payments, the late fees and penalties make it almost impossible to ever get caught up with the payments. What often happens with a loan modification is that those late fees and penalties can actually be rolled right into the principal of the loan.
So, what happens with a loan modification is that the mortgagee and the mortgagor agree to change one or more of the terms of a mortgage. Then the mortgagee basically starts all over with a new lower monthly payment that is much more affordable. This keeps the mortgagee in the home and it allows the lender to continue getting paid on the loan.
That’s what happens with a loan modification. It’s a great alternative for many homeowners, and many lenders, since it allows homeowners to stay in their home and won’t continue to add more weight to a housing market that is already near its breaking point.
By: Judy Mercer
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Top 10 Questions About Loan Modifications
The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need.
Mortgage Loan Payment Calculator
Buying a property is a massive undertaking. It is, no doubt, going to be the greatest expense of your life and one of the most nerve wracking purchases that you will ever make. We are talking about a very large sum of money and one wrong step could spell disaster and the loss of a lot of your money or even the loss of your home. If you are willing to undertake this kind of responsibility entirely on your own, then good luck to you. Most of us feel more comfortable getting some help in determining what kind of mortgage and financial help we should be asking for. One product that can help us to get started and understand the financial implications of the different loans available is a mortgage loan payment calculator.
A mortgage loan payment calculator will help you to establish a number of different facts. You will be able to enter your information into the calculator and then it will give you a whole range of interesting and very important figures. Then you will have a clear picture of how much you can reasonably borrow without having to worry about repayments. It would be disastrous to take on a mortgage only to find that you have bitten off more than you can chew and the repayments are much more than expected and too high to be managed.
Based on the information given, the mortgage loan payment calculator will be able to give a clear idea of how much you will be able to borrow based upon your earnings. This is the first step and will mean that you can realistically start looking at properties in the right price range. There is no point in drooling over a mansion and thinking that it could be a possibility when an apartment is going to be far more suitable. The calculator will be able to tell you what you can expect to pay in mortgage repayments. This is dependent on a number of factors. The term of the loan is a major point to consider. You will be able to establish whether a fifteen or thirty option is the best for your circumstances.
These are the main issues that you will want to have clear in your mind and these are within the capabilities of any mortgage loan payment calculator. Some of them will then go on to give you further information options such as tax savings, extra payment options, refinancing, insurance etc.
There are some excellent websites which are readily available through search engines offering you good advice and sometimes a very detailed mortgage loan payment calculator. Many of them are independent and there to help you with sound advice. As buying a property is such a huge undertaking, it is good to know that there is help at hand and it could save you a lot of money and possibly even your home.
By: Robert Grazian
Understanding Mortgage Accelerator Loan Program
Mortgage accelerator loan program is a unique loan clearance program that has been introduced in the U.S. recently. Based on the concept of home equity borrowing, mortgage accelerator loans have been in vogue for several years in the U.K. and Australia.
Mortgage accelerator loan program works on a very simple concept. Here, the borrowers, who have taken credit on their existing property, are required to deposit their monthly paychecks into their credit account. All the monthly expenses, excluding their monthly mortgage payments can be withdrawn from the account through lines of credit. The remaining unspent amount gets deposited against the credit resulting in a lower mortgage balance. One of the advantages of this program is that it saves the interest that needs to be deposited with the principal. As a result, the time taken to pay off the loan is shortened or in other terms accelerated.
However, the monthly mortgage payments during the initial 10 year in a mortgage accelerator loan are interest only payments, making it possible to the borrowers to become financially stable. Later, the borrower is required to make payments towards the principal. Even the line of credit decreases by 1/240 every month till the remaining loan term.
This program is ideal for borrowers who are not financially disciplined. If the borrower does not spend the money by drawing against line of credit, it can be used to pay off the house. Apart from this, an additional benefit that mortgage accelerator offers to borrower is instant cash through line of credit during any financial emergency. This gives the homeowner confidence to become aggressive in paying off his loan and still having ready cash available during the times of emergency.
By: Pauline Go
Loan Modification "Do It Yourself Kits" – Beware!
What is a loan modification anyway?
A Mortgage loan modification is a permanent change in the terms of your mortgage loan that allows your loan to be place back in good standing with your lender and potentially reduce the interest rate and provide affordable lower monthly payments. Modification is not a refinance of your home but a renegotiation of your current mortgage terms. The modification may include but not limited to a new interest rate, an affordable monthly payment, principle reduction and amortization schedule. A loan modification to stop foreclosure is a viable option that you can use to keep your home.
If you are one of the many Americans having a difficult time and have fallen behind on your mortgage payments. You are not alone. The first thing that you may be tempted to do is purchase a “do it yourself loan modification kit”. Well, if you are tempted and think that will solve your problem please keep reading.
So what are the advantage and disadvantages of a “do it yourself” loan modification?
Advantages
The primary advantage of a “do it yourself” loan modification is the money you will save by not hiring a legal professional to negotiate your loan. A loan modification “do it yourself” kit will give you all the necessary documentation and step by step process to negotiate with your lender.
Disadvantages
There is really no reason to purchase anything because if you need any information on modifying your mortgage loan that information is readily available through US Department of Housing and Urban Development (HUD). They will offer you free counseling and provide you with material to work with your lender and modify your loan.
However presenting your case of “hardship” to your lender may not be as easy as one may think. First of all you will need to know who to talk to. Once you find that person they will ask you to provide documentation to backup your hardship status. This could be a hardship letter, income statement and other documentation that may be requested. After providing the documentation then the lender will review and make a decision on whether to approve or decline the application and at this point you will begin the negotiation process with your lender.
So “do it yourself” could potentially save you some money but it will be a very time consuming process and at times it may be very aggravating and most likely a poor experience overall. A mortgage loan modification process can take a week to 90 days to complete. It will be dependent on your lender.
So be careful before you jump down the “do it yourself” route and only go in that direction if you are ready to dedicate plenty of hours and you like challenges.
What’s my alternative to “do it yourself”?
The alternative to do it yourself is using outside sources. If you decide to go the path of using the outside source make sure you are dealing with a professional company that is backed by legal team. Most outside source will charge you a fee on average of $2,500. Although this may seem to be a steep price your loan modification will be negotiated through professional attorneys who will not only save you money but remove the time consuming task and aggravation that you would have if trying to settle yourself.
The chances of a shorter loan modification process are much higher given that most service providers have established relationships with lenders and know who to talk to, what paperwork is required and how long the process may take. In other words your fee will be well worth your investment and you can be assured that in most case the service provider legal team is looking out for your interest.
So what should I do?
Although we encourage you to work with your lender if you are a payment or two behind, the reality is homeowners are probably not the best position to negotiate with their lender and in most cases you will end up in a more difficult position. Most of your lenders will know much more than you on laws as it relates to mortgage loan modification and could potentially take advantage of your lack of knowledge in this area. So my recommendation is to work with a service provider that has an experienced legal team and has dealt with multiple lenders. Do your homework and find a good service provider that will be looking out for your interest and not the bank or lenders interest.
By: Ronald Moore
VA Home Loan Rates
VA home loan interest rates are much lower than any other interest rates applicable on other kinds of loans.
The VA home loan rates are transferable. You demonstrate your positive points to lenders and request a lower interest rate. Lenders investigate a number of factors before issuing VA loans, such as a borrower’s credit record, income levels, etc, which in turn influences the VA loan rates. The lender will also want to assure that you are capable of meeting the payments to cover the cost of a home, which includes credit payments, insurance, taxes, income levels, etc. Eligibility for a VA loan is not based on your credit score, but you pay the same low rate whether you are making a 5% down payment or no down payment at all.
Though first-time VA home loan applicants are guaranteed a VA loan of up to $240,000, the actual amount of the VA mortgage loan will depend on income, assets, and credit history. You can choose VA home loans at rates that are adjustable. A variable loan rate can save you money, if you do not have a long-term interest in the house.
VA loans can help you to obtain the funds to purchase an existing single-family home or new construction. You can take advantage of VA home mortgage loan to refinance or undertake home improvements. The interest rates on VA home loans differ from one financing company to another. These specific financing companies offering VA home loans also have an array of products with different loan rates. So, you can choose a VA home loan based on such rates.
By: Alison Cole
Home Loan Modifications & Credit Ramifications
For many homeowners, a loan modification can provide welcome relief for high mortgage payments, stop foreclosure, and in some cases, even lower principal balance, or amount owed, on the mortgage. It is important, however to address the ramifications on ones credit for achieving a loan modification.
Many lenders will not consider granting a loan modification to clients that are not currently delinquent on their mortgage, regardless of hardship. Going 30 days late or for a longer duration can significantly lower your credit rating; those with near perfect credit ratings may see a decrease in their credit score of hundreds of points.
A decrease in your credit score may preclude you from qualifying for additional credit, in the form of installment, revolving, or mortgage debt. The most common installment loans are car loans or personal loans. In terms of immediate effects, missing mortgage payments may prevent consumers from being able to purchase new automobiles, and may cause the low introductory rates on their credit cards to increase.
A loan modification may save a homeowner thousands of dollars per month and provide them with peace of mind and financial stability, however, it is important the homeowner realizes the effects on credit that may result. Other loss mitigation services, including short-sales, may have similar effects on one’s credit rating.
On the plus side, if you are considering a loan modification, most likely you are already late on your mortgage, and the financial effects have already manifest themselves, hence a loan modification can only help you in your quest to achieve lower household bills. A loan modification should improve your credit in the long run since the very basis of the modification is to get you back on track financially to make future payments, without defaulting on the mortgage.
Unlike consumer credit counseling, or bankruptcy, loan modifications do not carry a blemish that lasts a number of years on credit. A foreclosure, or short-sale, however, may. The very best thing to do is speak with an advocate or counselor that will help you to determine the pros and cons of pursuing a loan modification, that can also help you draw up a financial prospectus to help you achieve your financial goals, while maintaining your credit rating, or if you are already late on your mortgage, setting up a plan that will help you achieve a higher credit rating as soon as possible.
By: Justin Bartlett
Legal Loan Bailout Home Loan Modification?
In simplest terms, a loan modification restructures the terms of a loan without actually refinancing the property it secures. A loan modification can be defined as an agreement between the lender and the borrower which stipulates a long term relief from unaffordable loan terms. Modification of a loan applies to the terms governing the interest rate, the amount of the monthly payment, and in some cases also the loan amount.
A permanent change in one or more of the terms of your loan, gives you a fresh start, and results in a payment that you can afford. The sole purpose of a modifying your home loan is to enable the borrower to meet the terms of the new loan for the foreseeable future. The cost of default is more than modifying a loan therefore a lender is likely to be open to loan modification.
Should I try modifying my home loan myself?
No. If you have a claim with an insurance company you will be treated much better with a public adjuster pushing the insurance company to treat you fairly. A public adjuster works for you, not the insurance company. The bank is not your friend. You need someone who understands your rights and the process of loan modification. Congress recently passed laws that give you special rights to help you modify your loan. We work for you. We are your advocate throughout the process. Possibly the most important reason you should work with us is the fact that all families who are candidates for loan modification are experiencing very difficult times. Extremely high levels of stress cause sadness and confusion. You need an advocate who understands how difficult it is for you and your family to weather such a storm.
By: Dustin Rohde
Loan Modification – Things You Should Know
There are record numbers of people today that are partaking in a loan modification to help with their financial problem. Let’s say that you have a loan with a bank and you are having trouble making your payments, the bank has a choice to make with how they will handle this.
One of the options is usually a loan modification. The reason for this choice is because it is easier. When a loan is modified, the bank might change the interest rate, the terms of the loan, or any other part of the original agreement can be modified. The purpose is to make the loan more affordable for you so that the bank doesn’t have to take extra measures to get the money from you.
Without loan modification the bank would likely have to hire an outside agency to get the money from you, if it is a home loan then they can foreclose, or they can write the loan off as a loss, especially if you file bankruptcy. Loan modification is a less expensive and more effective route to take and is usually in the best interest of the lending institution.
When you are dealing with a bank or other lending institution about delinquent payments and you explain your financial situation to them they might offer or you may have to ask about loan modification. The bank will usually take the steps needed to see if you qualify.
Basically, the bank wants to make sure that you are truly unable to make your payments. They will want all of your financial statements including pay stubs, your monthly expenses, and bank statements. Once you get all of the necessary paperwork together then you will present it to the bank. Unfortunately, it will likely take a few weeks before they will have a decision for you. They will however, advise you, in the meantime on what to do.
They may require you to make your payments on the loan, on time, to remain eligible for the loan modification. Use caution as there are many places that will offer assistance to you so that you can get a loan modification. You don’t need anyone’s help in getting one; the process is started by your request and is handled between you and the lending institution. There is no need to pay an outside agency to help you do something that you can do by yourself.
By: Chimezirim Chinecherem Odimba
Steps to Applying for a Home Loan
New to the business of taking out home loans? If so, this article will provide you with a step-by-step guideline on applying for a home loan.
Step #1
The first thing you have to do when applying for a home loan is to obtain your latest credit report. If passports are vital for you to travel abroad, credit scores serve the same purpose when it comes to obtaining financing.
Step #2
Fix your credit score if necessary. You can do this by yourself or with the help of a credit repair company. Check your credit report for inaccuracies or erroneous entries.
Step #3
Consider the type of loan you wish to make, as the rules differ according to the type of loan you’re interested in. A new construction home loan will provide you with the financial means to build your dream home. A first time home loan will enable you to purchase a new home outright. An ordinary home loan, on the other hand, will give you money to spend, but will hold your home as collateral at the same time.
Step #4
Check with the local government agency in your town if you qualify for any of the low-cost home loans they’re offering.
Step #5
If you don’t qualify for a government home loan, seek the next best thing: borrow from an FHA-approved lender. FHA stands for Federal Housing Administration. This government organization provides mortgage insurance to encourage companies to lend money to less appealing clients from the lower- to middle-class families.
Step #6
If there’s no FHA-approved mortgage provider nearby, make sure that you borrow money from a company with credibility and a good reputation. Don’t forget to compare rates.
Step #7
It’s now time to change a few things in your personal data sheet. See what you can do to legitimately raise the amount of your income. This will go a long way in making your loan application more appealing to the lending company.
By: Kent Pinkerton
