Your Questions About Home Loan Modification

Susan asks…

Home Modification Loan?

I am currently in a loan modification process, but I need to buy a car very badly. Should I buy the car? Please give me advice.

John answers:

Legitimacy is not by saying all kind of sweet words that will attract the attention of people so if you are that kind of person that is responding to such post that is saying all sought of good this about a loan firm i advise that you should watch your step because not all that glitters are gold just as the wise men says meaning not every loan firm that you hear good things about are legit, i was looking for a loan some time ago when i saw a post and they where like saying all kind of good thing about the firm and i decided to contact them and when i do i was scam and i decided not to follow such kind of post again, not that it is all of them that is bad but most of them are scam, the only loan firm that has really proven their legitimacy to me is the International Business Cooperative Loan Company. And i was even afraid when i was dealing with them because i sees every loan firm on the internet as scam loan firm because i have been dupe so many times and it is because i am in need of cash that made me to give them a try and they took me by surprise be lending me the money i need after i went through their process and it cost me some money to enable me to get through their process, as you may know, nothing good comes easily and that is still the reason why all those scam are succeeding in duping people on the internet today because they know that there is no loan firm who can lend money to you with out you paying any upfront fees and in this company the only fees i pay was the Barrister fees why all other fees where paid by the loan firm and their interest rate is very affordable, if you want to get in touch with them this is their email address:mybizz@businessmailbox.com am even thinking of applying for an Ex-mas loan from them but i do not have the chance yet, if you want to reach me, you can reach me with my personal email:traciajasper@yahoo.com and my name is Tracia Jasper from Sweden, i am an international business woman.

Ruth asks…

home loan modification?

John answers:

Not sure what your question is exactly but a home loan modification is a potential option your mortgage lender may offer you if you are having difficulty making your monthly mortgage payments. You will likely need to provide your lender with financial statements to see if you qualify for a loan modification. They may agree to reduce your interest rate, extend your loan term, create a temporary payment plan to get caught up, or a combination of options depending on the lender you have and what options they offer.

George asks…

how to go by loan modification on my rental home?

i need information how to go,by loan modification on my rental home. i tried many times but my lender won do it

John answers:

No, modifications are to help people stay in their homes, not make us landlords richer. You can’t modify an investment, you will just have to take your lumps.

Linda asks…

i am thinking of doing a loan modification on my home?

i know little about what a loan modification does, from what i’ve heard i can only benefit from it but i am afraid there are bad things that come with it, if anyone can tell me more about it i’d appreciate it. also i’d like to hear about how much it costs?

John answers:

I dont know your loan type. But this is basically how it works.

The main insurers of your loan, FHA, VA, Fannie Mae, Freddie Mac cut you a deal. They say you are about to lose your home. You walk away with nothing or you get this. The devil is in the details.

Fannie Mae tells your servicer cut their rate to 5%. They say we cant make money, Fannie mae says they lose their house if you dont. So they modify your loan. Lets say you owe the bank 200K The home is worth 150K. They lower your interest and your payoff to 150K so you stay in the home.

Say 5 years from now your home is now worth 300K. That 150K difference isnt yours, you refinance or sell the bank takes their money. There will be a ballon. Basically you get to modify your loan. If you sell and cant come up with the difference you can walk. If you have equity its gone.

If you want to stay in your house and not have a foreclosure then its a great thing. If you want to build equity then you really cant. But then again you cant build equity in a home that you wouldnt have had anyway.

They costs should be nothing Fannie Mae pays them 800 dollars to do it. Dont hire somebody to do something that you can do yourself for free. And you have to be 3 months behind. Dont get behind to do it, the lender isnt required to give you a modification.

Fannie Maes Plan
http://www.fanniemae.com/newsreleases/2008/4557.jhtml;jsessionid=1Y3HE1WIOLKXVJ2FECHSFGA?p=Media&s=News+Releases

Jenny asks…

Mortgage Loan Modification?

We are currently in great standings with our mortgage and the bank which holds the note. Due to unforeseen circumstances, we’ve got a reduction in income. We have a HELOC with another bank and about 50K in consumer debt. We have been unsuccessful in obtaining a refi using an outside broker obtained on the internet. Are biggest setback is our mortgage payment which is a fixed 30yr at 6.5% ($3500 mo). We cannot afford to pay the 1st, HELOC and the consumer debt anymore. We’ve never made a late payment…do we have a good chance with a modification? We have financed 2 houses with our current bank and have a personal relationship with our banks’ broker. We are going to call and ask but I was wondering if banks will modify one loan without having to touch the HELOC? We cannot refi both (not enough income to support it). We could afford to make the payment if we just had a lower 1st. NO WISE CRACK COMMENTS!! Serious answers only!
We would sell if the market wasn’t in such a slump…believe me, that was my 1st thought. California is the worst!

John answers:

I would take a very hard look at the consumer debt.

The interest rates on consumer debt are generally very high.

I would call the credit card companies where you have balances and remind them that you have never been late. Ask them for a reduction in the interest rates on your credit cards.

Tell them the alternative is that you can transfer those balances to credit cards that charge lower rates. Tell them that you like them and want to continue to be their customer, but that it does not make sense for you to stay with their credit card when you can get better rates elsewhere.

If they do not agree, I recommend that you start calling some different banks including yur own to get better terms on your credit cards. Also look for credit cards with lower minimum required payments.

Transfer your consumer debt to those credit cards. That will reduce your payments and costs on your consumer debt.

I would be very surprised if your bank will agree to modify the terms on your first loan, that is already a very good rate.

What are the terms on your HELOC?

There are lenders in my neighborhood that are advertising HELOC loans at the prime rate minus 1%. That is a very low rate for a second loan, Is your HELOC that low?

If not I recommend that you consider refinancing your HELOC to a lower rate, specifically to prime minus 1% or less.

Another responder mentioned refinancing your first to an adjustable rate loan with a minimum payment based on a payment rate of 1%.

These are very expensive loans. The fully indexed interest rate (interest plus margin) is often more than 8%. The unpaid interest is added to your principal balance.

Some unscrupulous Mortgage Brokers often trick you into accepting one of these loans with very high margins because the lenders pay the Mortgage Broker a kind of a kickback called a yield spread premium if they tack on a very high margin.

The kickbacks that Mortgage Brokers receive on these loans if they give you a very high margin can be $15,000 or more. The temptation to trick you into a high margin is very high. Many Mortgage Brokers cannot resist that temptation because the amount of money that they are paid is so high and most people do not even know what a margin is on these loans, so it is very easy for Mortgage Brokers to trick people on these loans..

These loans have very large amount of negative amortization. I would only recommend that as a last resort. It is a very expensive option for you, and it is also a dangerous option because it could cause you to lose your home.

Many of the homes in foreclosure today are the result of the homeowners getting those loans several years ago. The minimum payment period is only for two or three years and also ends when the loan amount has risen to a point where you do not have sufficient equity in your house.

This can happen even if they promised you that your minimum payment is fixed for 5 or 10 years. There is also a provision in the fine print on these loans that the minimum payment resets once the negative amortization has reached a certain point.

If you are making the minimum payment every month you will reach that point in a little over 2 years. Then even though you were promised the minimum payment would be fixed for 5 or 10 years, the loan will still reset and you will receive a notice from your bank that your loan has reset and your new minimum payment is now two or three times what it was.

Then the minimum payment reverts to the fullly indexed rate. That is often two or three times what the minimum payment was based on 1%.

Since you now have less equity in the home it may be impossible to refinance because you do not have sufficient equity in the house.

The result is that your minimum required payments will be much higher than they are today.

IF YOU ARE HAVING TROUBLE MAKING YOUR MINIMUM PAYMENTS TODAY, YOU WILL REALLY HAVE TROUBLE WHEN ONE OF THOSE 1% ADJUSTABLE RATE LOANS REVERTS SO THAT YOU HAVE TO MAKE PAYMENTS ON AN INTEREST RATE THAT IS 8% OR HIGHER ON A MORTGAGE BALANCE THAT IS SUBSTANTIALLY HIGHER THAN YOUR MORTGAGE BALANCE TODAY BECAUSE OF THE NEGATIVE AMORTIZATION ON A VERY EXPENSIVE ADJUSTABLE RATE LOAN.
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