The loan modification plan was instituted by President Barak Obama and his administration. By providing lenders with hard to resist incentives they then agree to alter, or modify the terms of a person's current loan. For homeowners this is great news, because it makes it easier to meet the installments each month. Because some of the cost involved used to be for the lender to pay it was almost impossible to have mortgages on Columbus houses modified prior to the plan being implemented.
How to determine if you qualify
To qualify for the modification plan you will need to show that you purchased the house prior to 2009 and that it is in fact your main residence. The loan amount cannot exceed $729.750, however, if you live in a more expensive area you can expect the loan limit to be somewhat higher than that.
Also, the loan is only available on the first mortgage. It does not apply to any subsequent mortgages you may have. Your mortgage has to be more than 31% of your monthly income if you are to qualify for the loan modification program. And lastly, you need to be able to show that you are facing financial difficulty which means you are having problems paying your mortgage. Whether it is because of the loss of a job, less working hour, illness, separation and/or divorce, or whatever else.
Loan Modification Process
You very first step is that you contact the lender and request the modification. Remember though, that it is not necessary for them to agree unless they are participants in the Obama plan. Financial incentives means that many lenders are part of the plan.
Your next step is to get all the necessary paperwork in order. You will need to be able to provide evidence of your monthly income before tax,k the last tax return that you filed, if you have savings and/or assets then you are required to provide relevant info about them. You will also need to provide statements for the mortgage and loan and this includes your second mortgage if you have one, or else the home equity line of credit. To help make the process easier draw up a budget. Make sure that your monthly expenses, which includes your credit card and loan installments, whether it be a student loan, or something else.
Once you have contacted the lender, requested the modification and made the required info available, you can then proceed to the final part of the process which is to negotiate the terms of the loan with the lender.
Modification vs. Refinancing
When you refinance your mortgage all the closing costs and other fees become your responsibility. However, when it comes to the Obama plan there are no fees and even if you are late with your installments the late fees, or interest, can be waived. Unless your credit record is impeccable, it is highly unlikely that you will be granted refinance, because of the present state of the credit climate. So, cost and the ability to qualify are two of the main reasons why you should investigate the option of loan modification.
While on the subject of arrears a loan modification is a perfect solution. Of course, refinancing still has its own perks. For one thing, if you have equity in the home and you are after a better interest rate then refinancing is the answer. And it is irrelevant whether or not you qualified for the Obama plan. Also, should you need to access cash in your home\'s equity refinancing makes that possible.
If you want to save between eight hundred and two thousand dollars then you will need to negotiate the modification instead of having a service provider or lawyer do it on your behalf. It is easy for you to do it because of the incentives available to lenders. As long as you can offer relevant assurance of timely payments each month you should not encounter any problems.
How to determine if you qualify
To qualify for the modification plan you will need to show that you purchased the house prior to 2009 and that it is in fact your main residence. The loan amount cannot exceed $729.750, however, if you live in a more expensive area you can expect the loan limit to be somewhat higher than that.
Also, the loan is only available on the first mortgage. It does not apply to any subsequent mortgages you may have. Your mortgage has to be more than 31% of your monthly income if you are to qualify for the loan modification program. And lastly, you need to be able to show that you are facing financial difficulty which means you are having problems paying your mortgage. Whether it is because of the loss of a job, less working hour, illness, separation and/or divorce, or whatever else.
Loan Modification Process
You very first step is that you contact the lender and request the modification. Remember though, that it is not necessary for them to agree unless they are participants in the Obama plan. Financial incentives means that many lenders are part of the plan.
Your next step is to get all the necessary paperwork in order. You will need to be able to provide evidence of your monthly income before tax,k the last tax return that you filed, if you have savings and/or assets then you are required to provide relevant info about them. You will also need to provide statements for the mortgage and loan and this includes your second mortgage if you have one, or else the home equity line of credit. To help make the process easier draw up a budget. Make sure that your monthly expenses, which includes your credit card and loan installments, whether it be a student loan, or something else.
Once you have contacted the lender, requested the modification and made the required info available, you can then proceed to the final part of the process which is to negotiate the terms of the loan with the lender.
Modification vs. Refinancing
When you refinance your mortgage all the closing costs and other fees become your responsibility. However, when it comes to the Obama plan there are no fees and even if you are late with your installments the late fees, or interest, can be waived. Unless your credit record is impeccable, it is highly unlikely that you will be granted refinance, because of the present state of the credit climate. So, cost and the ability to qualify are two of the main reasons why you should investigate the option of loan modification.
While on the subject of arrears a loan modification is a perfect solution. Of course, refinancing still has its own perks. For one thing, if you have equity in the home and you are after a better interest rate then refinancing is the answer. And it is irrelevant whether or not you qualified for the Obama plan. Also, should you need to access cash in your home\'s equity refinancing makes that possible.
If you want to save between eight hundred and two thousand dollars then you will need to negotiate the modification instead of having a service provider or lawyer do it on your behalf. It is easy for you to do it because of the incentives available to lenders. As long as you can offer relevant assurance of timely payments each month you should not encounter any problems.
About the Author:
About the author: Kurt Novak is a long-time property investor specializing in helping home owners avoid foreclosure. His blog shows how to find the best Columbus Loans and successfully do your own Loan Modification.
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