Upside Down Mortgage

Archive for June, 2009

Mortgage Modification Letter

Question: Can anyone tell me a program that can help pay on your mortgage.?

I am 1 month behind on my mortgage and they have cut my work hours. I send a letter to mortgage company to see if i could get modification and the told me NO. Can any one help with a place that would help with the mortgage payments. I cannot refinance because of my income.
Also forgot to state I had a 2nd job but because of my health i could not keep it worked 2nd job for 4 months

Answer: Your only hope is "Hope for Homeowners" through FHA if your mortgage company/bank is participating.

Since a house is considered an asset, there cannot be any program, such as a charity, which assists you in paying your mortgage.

Get a second job since your hours have been cut back at Job #1. You need the money, and not only for your mortgage. Also, slash your spending -- the mortgage has to be paid or you are in big trouble on numerous fronts.

Mortgage Modification Secrets: Shhh!

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Loan Modification Ratings

Everyday we read about the worldwide financial crisis and, specifically, about the U.S. banking and housing crisis.  To understand the challenges facing borrowers during the Housing crisis, it is critical to understand adjustable rate mortgages - how they work and how they can impact you. 

ARMs offer both advantages and disadvantages. Unlike a fixed-rate mortgage, an ARM provides interest rates that change periodically - and payments that go up or down accordingly.  At first, lenders generally charge lower interest rates for ARMs and this makes an ARM easier to afford initially.  If interest rates remain steady or move lower, this can work to your long term advantage. It is important, however, to weigh the risk that if interest rates increase in the future, so will your monthly payments. 

The initial rate and payment on an ARM will remain in effect for a limited period--ranging from several months to 5 years or more. After this initial period, the interest rate and monthly payment may change at regular intervals - every month, every year, every 3 years.   This period between rate changes is called the adjustment period.

The interest rate on an ARM is determined by two things: the index and the margin. The index is usually a standard measure of interest rates and the margin is an extra amount that the lender adds. If the index rate goes up, so does your interest rate and monthly payment.  On the other hand, if the index rate goes down, your monthly payment may go down. Not all ARMs adjust downward, however so be sure to read the details about any loan you are considering. 

Lenders base ARM rates on a variety of indexes. You should ask what index will be used for your ARM, how it has fluctuated in the past, and where it is published.  

The margin may differ from one lender to another, but it is usually constant over the life of the loan. The fully indexed rate is equal to the margin plus the index. For example, if the lender uses an index that is currently 4% and adds a 3% margin, the fully indexed rate would be 7%.

Some lenders base the amount of the margin on your credit record - the better your credit, the lower the margin. In comparing ARMs, look at both the index and margin for each program.

An interest-rate cap places a limit on the amount your interest rate can increase. Interest caps come in two forms: A periodic adjustment cap, which limits the amount the interest rate can be adjusted up or down from one adjustment period to the next, and a lifetime cap, which limits the interest-rate increase over the life of the loan.  By law, virtually all ARMs must have a lifetime cap.

In addition to interest-rate caps, many ARMs limit, or cap, the amount your monthly payment may increase at each adjustment.  A payment cap can limit the increase to your monthly payments but also can add to the amount you owe on the loan. This is called negative amortization.

If you are considering an ARM, ask yourself: 

• - Is my income enough--or likely to rise enough--to cover higher mortgage payments if interest rates go up?
• - Will I be taking on other sizable debts, such as a loan for a car or school tuition, in the near future?
• - How long do I plan to own this home? If you plan to sell soon, rising interest rates may not pose the problem they do if you plan to own the house for a long time.
• - Do I plan to make any additional payments or pay the loan off early?

 

Golden Rule:  Before you consider any loan, ask questions and read the details. For information and news please visit Loan Modification Help Center

About the Author:

Loan Modification Help Center

www.loanmodificationhelpcenter.org

Source - What You Need To Know About Adjustable Rate Mortgages (Arm) – Loan Modification Help Center

N scale model trains Loan Modification Lowers Your Fico Cred

Loan Modification Value Test

The Obama administration’s Making Home Affordable Plan is in full swing and is effective immediately. Homeowners who are on the brink of losing their homes due to foreclosure have finally saw a ray of sunshine at the heart of the most powerful president’s large-scale plan, Barack Obama’s aim of saving millions of homeowners and the housing industry from the sludge.

Obama home loan modification is one of White House’s ambitious plans of helping almost 5 million citizens to restructure their current mortgage into something workable. To encourage active participation, the said home loan modification is set to benefit both parties – the debtor and the lender. Viewing the plan to a homeowner’s perspective, an opportunity to rework troubled financial loans to a more affordable cost is said to be the advantage of the modification program. Then again, seeing it through the lenders’ perspective, the government provides cash incentives to these private investors from every approved and modified mortgage of at-risk clients. Hence, both parties involved shall benefit from the said modification program.

To provide you of further details concerning Obama home loan modification, here are key facets of the said modification program.

1.    Its not about upside-down loans – It’s all about the ability of a homeowner to pay the monthly payments. The Obama modification plan centers on providing struggling homeowners the chance to stay in their properties as long as they can comply with the agreement of paying their monthly obligations on time. Upside-down loans occur the moment a debtor’s loaned balance is greater than the value or cost of the property, hence the foreclosure. Contrary to the statement, foreclosures only happen if a homeowner is not at all capable of paying his monthly dues, and certainly not the so called ‘upside-down loan’. Succinct to say, it’s not about the price, but it’s the payment that matters.

2.    Serious hardship – Those who are eligible for Obama home loan modification program are those with really serious undertakings in their present financial condition. Those who have been affected of spiral of lay offs due to painful recession and those who have a principal remainder of up to $729,750 are the only ones entitled for this program. A debtor will just have to sign an affidavit of financial hardship together with supporting documents such as income statement and the like. Then, the verification process will be done as soon as a debtor is able to accomplish all the necessary requisites needed.

3.    The thirty-one percent policy – The Obama loan modification plan also ask lenders to moderate and trim down monthly payments of borrowers to no more than 31 percent of the debtor’s net compensation. As a means of lowering and reducing payments, the lender would primarily decrease the interest rate to 2 percent so as to hit the 31 percent limit and lengthen the terms of payment up to 40 years.

4.    The net present value test – This specific test would be the determining factor if a particular mortgage will be modified. To confer to the best economic interest, a lot of lending investors generally delve deeply into the production of more cash flow as a way of verifying if your mortgage is qualified for restructuring.     

Will all these plans work? At the outset, the program may reduce possibilities of foreclosures, that’s for sure, but it could also pave way to a spike in mortgage defaults. What do you think? You be the judge.

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Source - Obama Home Loan Modification - Everything You Need to Know