Home Loan Modification

Loan modification- The timing is right now
During the past 21 years in the mortgage and finance industry, I have never seen interest rates as low as they are today. There has been a surge in refinance applications within the past 4 months as a result. I used to think that 6.25% was an excellent rate, until recently. Many of the consumers who are applying for mortgages are actually refinancing loans that they had only taken out 2-3 years ago. With rates as low as they are now, borrowers who are currently at 6.25% are seeing a tremendous monthly savings. Unfortunately, refinancing is not an option (or even possible) for most people.
Many consumers who are trying to take advantage of these low rates are being turned down. In fact, the percentage declined loan applications are very high. The three main reasons why many borrowers are unable to refinance their homes are:
1-No equity. Property values have corrected significantly in the past 2 years to the point that many homeowners have no equity or are ‘upside down’, meaning they owe more than their home is worth.
2-Loss of income or wages. Many individuals have taken a reduction in pay. Others who have lost their jobs are seeking employment with less pay due to the weak economy.
3-Credit problems. Is it estimated that 50% of Americans have suffered credit problems during the past two years as a result of the economic downturn and hard times.
Any of the above would make it impossible to refinance. I am seeing countless people being turned down every day for mortgage financing, seemingly unable to take advantage of these unprecedented rates. However, there is a solution for individuals looking to capitalize on today’s low interest rates. This solution is a loan modification.
Although loan modifications have been popular now for the past 2 years or so, now more the ever is the best time to explore this option. One of the most important considerations your lender will look at in evaluating your chances for getting a modification is the payment reduction and benefit to you, based on current market interest rates. With current rates at 4.75%, and many borrowers at 6.25% or higher now, the payment reduction benefit is gigantic! All other qualifications being equal, you stand a better chance of getting approved today for a modification than you would have 6 months ago. For example, if current interest rates were 6.5% (like they were last year), banks would be less likely to grant you a modification. The reason for this is simple. For a modification to make sense, the bank would have had to give you a rate below 6%, which they were not too excited about doing last year. Now fast forward one year. Since rates have fallen so much, and many consumers are at 6% and above right now, lenders are becoming more relaxed and are offering additional options that they hadn’t previously. It’s just not as painful for them to modify loans as it was before, when rates were higher.
Rates will never be this low again. They will soon rise and banks will no longer be as flexible as they are today. Don’t under estimate the power and the results that can be achieved by modifying your loan. I have personally seen mortgage payments cut in half, principle reductions of $30,000, adjustable rate loans turned into 4.5% fixed, and delinquent payments (8 months past due!) brought current. The best part about all of this is that there are no closing costs, nothing. When you deal directly with your bank it’s free.
This is not to say that you should simply call the bank and they will automatically lower your rate. It is still necessary to understand how the modification process works and how the lender will qualify you for it. You only get one chance to present your case to the lender. You can’t go back and change the numbers if the bank says no. However, once you learn the basics of the process, the qualifying parameters and the right questions to ask, you will be able to present your case in such a way as to maximize your results, lower your payments, reduce your rate and possible cut your principle balance too. I can tell you this for a fact because I see the results every day. A do it yourself guide is all you need before speaking to your lender. Take advantage of the opportunity now before it is too late. For more information visit www.mortgageloanmodificationsecrets.com