If you are like many people in the current economic conditions we are all living within, you may be feeling like your mortgage or mortgages are a rock around your neck. If this is the case for you, or someone you know, please read on.
The first question is: Was your loan a Freddie Mac or Fannie Mae loan originally? The Federal Government has come out with HAMP to help homeowners in distress who did not originally have a Freddie or Fannie loan. Freddie and Fannie have their own guidelines, rules and applications available. These modification guidelines and applications are available at the Making Home Affordable.Gov website.
The basic guideline remains the same on all of these modification programs through the fed – the loan balance must be under $729,000.00.
Mortgage modifications are now attainable to many homeowners who have mortgages that exceed over 31% of their income. This may or may not have been the case when you at got your current mortgage. For some of us there has been a drastic change in income; some homeowners took an adjustable rate loan, like an ARM believing that they would have equity and be able to refinance but have found that with the depreciation of their home and the increase in interest rate they can no longer afford to pay their mortgage. Whatever the reason, if your home mortgage is overwhelming you a loan modification may be the appropriate solution for you.
Contrary to what many believe, you do not need to be behind in your payments to get your first mortgage and or second mortgage modified. In fact a mortgage modification can help you preserve your credit standing if you do this prior to falling behind.
Many lending institutions are willing to do a variety of modifications and even a combination of several different tactics. The three primary methods of creating new loan terms that fit your current budget are as follows:
1) A reduction in the principle amount of the actual loan.
2) A reduction in interest via reducing the interest rate you are currently paying on the money you are borrowing.
3) An extension of time, lengthening the term of the loan to reduce the monthly payments.
Remember though that there is no forcing a mortgage holder to modify – it is by mutual agreement. Recent statistics show that of 100 homeowners applying for a modification 83 will not be successful for a multitude of reasons, the modification process requires a lot of patience and diligence, however with a little help you can do it yourself and save the fees charged by modification companies. Upfront fee collection is now illegal in California so if you are asked for an upfront fee this is a huge red flag and you should contact the Department of Real Estate to verify the validity of this company or individual, unless it is a legal firm collecting a retainer.