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Lower My Rate - How to Refinance or do a Loan Modification
One of the biggest myths is that you have to be behind in your mortgage.
Can't keep up with your mortgage? Considering short sale or foreclosure? You have options to stay in your home and lower your mortgage payment. An alternative is a loan modification says Fred Solomon of Solomon Financial. To see if you are a candidate, go to freemoneyhour.com/loancost.php.
Why are there more short sales and foreclosures today? 70% of Californians have some sort of adjustable feature inside of their mortgage. An alarming 34% of Americans have no clue what kind of mortgage that they have. CNBC recently reported that $1.4 trillion of loans are going into default. The loan business is a $10 Trillion business – that’s 14% of all loans in the United States that are going into default.
Many homeowners are considering a note modification aka a loan modification. One of the biggest myths is that you have to be behind in your mortgage. This is an agreement with the lender to change/modify the terms of a loan in lieu of a foreclosure or short sale. It’s a win-win situation for the bank and the owner of the home. It allows the owner to be able to continue living in their home without being forced to sell or having the bank foreclose on their property. It allows the lender to save on the costs of a foreclosure or having to take a reduced pay off on a short sale. A note modification is for someone who cannot afford their monthly payment but wants to stay in their home. For the lender, a note modification is a better alternative than a short sale, which is typically a better alternative than a foreclosure.
In order to get a note modification approved, the lenders are looking for a debt to income of about 80% of the borrower’s net monthly income. So you add up all your monthly debts (including your mortgage) and if your debts are higher than 80% of your monthly income, you will qualify for a loan modification. In this example, you would reduce your monthly payment on your mortgage to 80% of your net monthly income. Let’s say your net monthly income is $4,000 per month - 80% of that would be $3,200. That means, that all of your debts added together should not exceed $3,200 and if they do, then you would reduce your mortgage payment to whatever the amount would be to add up to no higher than $3,200.
Fred Solomon is co-host of The Solomon Free Money Hour Talk Show; trainer-speaker on real estate, foreclosure, current mortgage and market trends; author of PUT YOUR MONEY WHERE YOUR HOUSE IS.
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