F.A.Q's
How long does a loan modification take to complete?
It takes around 30-60 day.
What is involved in a Modification?
A loan modification entails allot of details that deals with the unpaid principal balance, the house value, the pay off terms, and the expected interest rate.
What is a Deed-in-lieu(DIL) of foreclosure?
A DIL is an alternative to foreclosure. It is better to save your personal credit than to go into a foreclosure; That will do major damage to your credit.
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A DIL is you giving back the house usually due to not being to afford the payments or sometimes for other reasons; the house is then auctioned off to the highest bidder, and you are relieved of the payments. Plus, it is far more milder on your credit report than a foreclosure, or even a short sale. It like a settlement.
Which is better a Loan modification or a DIL?
A loan modification is usually better if you can get the terms you desire for your mortgage or come close to them, which is primarily decided by the lender. It's like finding a common ground. A DIL on the other hand is just realizing that you may not be able to afford the home and just giving it back assuming that your lender will take it back, and "let you off the hook."
If I had a modification in the past can I now qualify for the new modification recently passed on March 4th, 2009?
Yes, many lenders are still doing a loan modification with the new rescue modification, even if you had a regular modification in the past.They are incentives involved for the home owner and lender alike that did not exist with the old modification plan. This one is more motivational for everyone involved.
If I am current on time with my mortgage payments can I get a Modification?
Yes, you still can be accepted.
If I am in foreclosure can I get a modification?
Yes, you still can try to modify your loan. In fact, many lenders are holding off on foreclosure since it's usually the last and less desirable option for mortgage companies due to the great loss for them and homeowners.
Will my lender charge for President Obama loan modification bill that was passed recently?
Currently there are no charges with this recent modification. Unless you use a 3rd party to complete the work for you.
Is my loan modification guaranteed?
No. There are many factors involved. I can say this though, this last program is more accepting and more inclusive than the last one.
Does my mortgage company have to participate with this latest loan modification?
No. Mortgage companies do this at will. Not all lenders will participate, but most will. However, if they choose not to participate in the new rescue program, they will usually continue with their old loan modification program.
Is a refinance better than a loan modification and if so why?
It depends. If you have good to excellent credit, and full proof of income you will normally get a great new low rate by refinancing based on the current rate; which is usually better than most modifications rates. However, modifications also offer competitive rates too. Some as low as 1.5% with Fannie Mae/Freddie Mack refinance.
What will happen after I get a reduction in my mortgage with the new plan?
You will see a lower interest rate, and your loan will be brought current once again.You will now have a brand new start. Most lenders are hoping that many homeowners will now stay current and not end up back in the same past due cycle again, as if they never had help.
What are some of the qualifications for the stability and affordability plan just passed?
Some general qualifications are:
The borrowers monthly mortgage payments must be greater than 31% of their gross monthly pay.
If borrower's other debts(such as credit cards, car payments, other mortgages, etc.)are greater than 55% of their gross monthly income, they might be required to sign up for counseling.
Borrowers must have verifiable income to qualify(Unemployment is not considered to be long term income that would qualify a borrower
Just the 1St lien will qualify for this program assuming that is your primarily residence; There is normally a regular modification for any 2ND liens.
What kind of interest rates can I expect if I am accepted for the new plan?
May rates are in the 4.5% range on a 30 or 15 year mortgage.
Will get a arm or a fixed rate mortgage?
Fixed rate mortgage.
Do I have to have good credit for a modification?
How will my credit change if I got accepted for this new loan?
You will begin to report current with the credit bureaus once modification is completed.
Are there any real benefits for getting a Loan modification?
Yes. You will now have to start off fresh with a new low interest, fixed rate mortgage; And with time if you continue to pay on time, you will then clear up some of those past due mortgage payments blunders.
Are there ways to stop my foreclosure?
Yes. There are many ways to stop a foreclosure, even if you have not made a mortgage payment in months.
Can Short Sales damaging?
Yes; Because when a borrower does a short sale the property is accepted for a short sale by the lender or servicer. The lender views it as "something is better than nothing" for the sale of the property if the borrower is unable to make the payment which beats a foreclosure.The property will not sell for the total amount owed on the house loan; The homeowner will now be responsible for the difference of what was owed on the loan, and what the house was sold for; but will owe the taxes on that amount in the form of income tax.
For example, lets say you owed $200,000 on a home loan but you short sold it for $160,000. The $40,000 will be considered as income, and you would then be taxed on it as you would on an income made. Imagine if your failed to pay the taxes owed on the $40,000, and it compounded with IRS penalties. That might become a big Internal Revenue Service problem for you and our family. A DIL or modification would be a much more attractive option.
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