Ken Charnly asked:


This article will seek to answer some frequently asked questions about home improvement loans, and help you make an informed decision about whether a home improvement loan is right for you, and what kind to choose.

What is a home improvement loan?

A home improvement loan is a loan which is secured on your property, allowing you to free up cash to spend on whatever improvements you might wish to make.

Why get a home improvement loan?

Whether it is a loft conversion, a new kitchen or bathroom, or even a swimming pool, a home improvement loan can be used to make those changes you have always wanted to, but never quite got around to making.

How much can I borrow?

It depends on your circumstances, and the value of your property. Generally you can borrow an amount equivalent to a significant proportion of the value of your home.

What period can I repay a home improvement loan over?

Specific terms vary, but home improvement loans tend to be repayable over a period of between 5 and 25 years.

How do I choose the right home improvement loan company?

Look at the interest rates on offer, and also the reputation of the companies offering them – there are a lot of lenders in the market nowadays, and not all of them necessarily have the best track record.

What other factors do I need to bear in mind when applying for a home improvement loan?

Apart from the interest rates, look out for insurance schemes to cover you for changed circumstances such as unemployment or illness, the possibilities for early repayment, and penalty clauses for late repayments.

 



COLBY

Sadhana Dhanyal asked:


Borrowers, who have accumulated too many debts, find it difficult to clear the outstanding debts. The impending debts over a period of time create debt problems. When the situation gets worse, such borrowers find it extremely difficult to avail loans. The constant pressure to payback the loan creates financial problems.

Opting for bankruptcy may seem as the last option to get over credit problems. Before deciding to go ahead with this, it would be advisable to know what exactly bankruptcy is. Bankruptcy loan process and FAQ’s, can help such borrowers get a fair idea about what involves bankruptcy. A person can become aware of the bankruptcy loan process by knowing in depth before hand what bankruptcy means.

Here are some of the FAQ’s on bankruptcy.

What is Bankruptcy?

Bankruptcy is a legal process that is available to anyone, who is burdened with debt problems to make a fresh beginning financially. To go into bankruptcy, a person must be insolvent. It means:

•  A person must be absolutely incapable of making any further payments.

•  The debts must have exceeded the value of the assets.

•  The person must not be a bankrupt already.

What is a Trustee and what do they do?

Trustees in bankruptcy are the only debt professionals, that can provide a full range of debt relief options and the only debt professionals that can guarantee protection from the creditors.

Will My Creditors Stop Harassing Me?

Yes. Once the bankruptcy documents are filed, any kind of action against the person must be ceased.

What is the procedure to apply for bankruptcy?

There are two ways a person can become a bankrupt. The first and most common way is to make an assignment in bankruptcy (voluntary bankruptcy). The second method is the creditors asking the court to make an order that a person is bankrupt (involuntary bankruptcy). In both cases a Trustee in Bankruptcy is required to administer the process.

Will I Lose My House or Car?

This solely depends on how much equity you have. With a house for example, the equity would be the amount left over after mortgages, penalties and property taxes are taken into account. If your equity in the asset is within the allowable limit, then the Trustee will generally release the asset to the secured creditor.

What if I Have the Cash Flow to Make a Proposal?

If a person has the ability to make a proposal (i.e. his or her income exceeds their living expenses), then he or she should consider making a proposal.

There are many alternatives of bankruptcy. Opting for an IVA can help a person immensely. It will eliminate the risk of going bankrupt. A person can make use of the available options and avoid bankruptcy.



GAIL

AccessNational asked:


If you are looking to find out your New York FHA refinance benefits? Look no further than your New York FHA mortgage lender,

who has some excellent tools to help you find out what’s best for you!

FYI: New York FHA Refinance Benefits

What are the New York FHA refinance benefits that will help you when you become a home owner, especially when compared to other programs? Here are the list of a few:

•Lower monthly payments and interest rates

•Better terms (30 to 15 years) and equity building ability

•Streamlined paperwork, reduced documentation

•Low down payments

•Cash-out options for other expenses and debt consolidation

•;More access to other credit lines

•Little to no out-of-pocket expense needs

Sounds good? Keep reading to find out how you get those New York FHA refinance benefits.

Getting a lender to learn more about your New York FHA refinance benefits

In order to get access to national mortgage information and learn about FHA refinance, you need to get in touch with a local reputable FHA lender. You can find one through the ads or yellow pages or look on the Internet. The HUD website can also help you locate a qualified FHA lender.

Remember, though, that even though there are many great benefits with your New York FHA refinance benefits, FHA is just an insurance policy which provides backing and program guidelines. The loan terms, fees, rates and closing costs are determined by the lender and will vary, which is why you should look around for the best terms.

Getting your New York Refinance Benefits — next, the New York FHA Mortgage Calculator

So, you have your FHA lender, now you can go to their website and discover one of the best tools going in your hunt for a good mortgage.

This invaluable tool is a New York FHA Mortgage Calculator. The New York FHA Mortgage Calculator should be a standard part of any New York FHA lender’s web site. On some, it may just be called a mortgage calculator.

Why is this New York FHA Mortgage Calculator so useful? It’s because the New York FHA Mortgage Calculator show you want you can afford at each interest rate, which decides how high of a mortgage you can afford based on the rates being offered.

You can use the New York FHA mortgage calculator to estimate your payment ceiling and what you can afford. As you get term offers, you can stick in the rates, terms and down payments to see what you think about the ultimate affordability of the payment.

You can also enter the terms into the New York FHA Mortgage Calculator from different lenders to see who is giving you the best deal on affordable payment. But don’t forget that you can’t compare additional fees and other costs. To figure out which New York FHA refinance benefits a chosen lender might offer, you need to talk to the lender you’ve chosen and figure out the terms from there.

Additionally, you can change up the terms on the New York FHA Mortgage Calculator to decipher which options may work the best for you. For example, you can see how the amount of your down payment may impact your monthly payment.

The New York FHA Mortgage Calculator is a quick and good tool to have on your side as you begin the borrowing process. Plus, there are other tools on lenders’ web sites, like information FAQ lists and article archives. They can offer much information and research which is helpful. When you take time to locate a good New York FHA lender and use the information and tools they provide (like the New York FHA Mortgage Calculator) you can find out all about the great refinance available to you.



DEAN

Jay Conners asked:


If you are considering investing your hard earned money with a mortgage lead company, or you are switching lead companies because you have gone through the pain of seeing your money go down the drain, here is a good place to begin.

Before you take that leap of faith with a lead company, take a step back and reexamine exactly what it is you are looking for from a lead company.

You should be looking for the exact same thing that you would expect from any other reputable company that you deal with. And that would be good quality service.

Before you invest your money, research the company, most of the research can be done right there on their web site. Read the FAQ’s, read about their return policy, read about how they acquire their leads, etc.

Once you have read all there is to read about their company, give them a call and speak with someone in their customer service department. Ask as many questions you feel to be appropriate, and verify everything you have read with them.

You should be able to get a good read on the company from the customer service representative about what their company has to offer. And make sure their answers to your questions are matching up to what their site implies.

Lead generation will be something you definitely want to research. It is crucial for you to find out where exactly the lead companies obtain their leads from.

Do they own and operate their own sites to obtain their leads? Or are they buying their leads from other lead companies and recycling them?

Remember, as with just about everything else, the better the quality of the product, the better your chances of success with it. The same holds true for mortgage leads.

Also, consider the pricing that is involved. Make sure you compare companies, and will you be getting what you paid for? You don’t want to be spending twenty-five dollars on a lead that has already been sold five to seven times.

Check out their return policy. Is it fair? Will they refund your money if the contact information is bad? Will they return your lead if the person on the lead is not responding to your calls? Will they return your lead if the customer says something to the effect of, “ I took care of that months ago.”

There is a lot to consider, so before you invest your hard earned money, take the time to do your research.

One more thing . . .

Before investing, call the lead company to make sure someone answers the phone, if you have to leave a message, make sure they return your call. Than, e-mail them and make sure you get a response, if not move on. If they are unresponsive now, you can bet they will be unresponsive when you have an issue with the lead.

You have worked very hard for your money, so before you invest it with a lead company, make sure you do enough research where you know that whatever company you decide to go with, you will be getting the best return on your investment. Good luck.



SANTIAGO

Mike Samadi asked:


(copyrighted)

Here is a new one to some of you, but an old one to me.

I have been warning a lot of people about certain types of scams for a long time.  Recently, I learned about a few people that were scammed and sent their money elsewhere based upon fake checks they received.  They were both young and old in age.”

Several months ago, as I finally got one of my properties back because of the injustice of the U.S. Department of Justice.  A friend suggested that I should advertise the property on craigslist.com.  Not knowing the site, I listed an Ad.  Of course this site is just like any other advertising site visited by good people but also visited by scammers.

As a result of my Ad, I received many emails from interested parties, who all wanted me to hold the property, and they have already sent me payment. They sent me payment so that I would pay the travel agency for their travel arrangement from England, Australia or even some northern parts of the U.S.

Here is the order of the emails I receivedJ

1.    Every one of them had very poor English writing skills, however, claimed to be doctors, professionals, engineers, and minimally educated people with high paying jobs.

2.    They all claimed to be English speaking citizens.  Of course, any one can be a citizen, even if they cannot speak a word of the national language of the country.

3.    All of them had the same style of writing with broken sentences.  All of them excited; asking me not enter into an agreement with anyone else (showing much interest).  They also claimed that payment is on the way -even if they didn’t have my information.  Then, they asked me for my name, address, and phone so that they could send the payment.  They all claimed that the payment has come or is coming from a company in the U.S.  They all also claimed that they are sending me more that my required amount so that I would pay for their travel arrangement to my house/city and all their furniture shipment.

4.    All of them were ready to grab the property, without seen the property.

5.    All of them had a third party in the U.S. that was going to overnight the check to me

Mind you, I have been writing and talking about scams for years and am very familiar with banking laws (at least presentation of checks and have access to find any bank and their company officers in a matter of minutes, if not seconds.

When I saw the first email, I prepared a general Q & A (FAQ) email, describing the property, showing pictures, described in detail that I ONLY ACCEPT U.S. BANK CASHIER/CERTIFIED CHECKS or the U.S. POSTAL SERVICES MONEY ORDER.  I announced clearly that I would not accept any other payments.

I also noted very clearly that, I WILL NOT HOLD THE PROPERTY for ANYONE UNLESS I RECEIVE THE EXACT AMOUNT OF PAYMENT FOR THE FIRST MONTH, and 2 PAYMENTS FOR SECURITY.  Moreover, I noted, “PLEASE DO NOT SEND ME A DIME more that what the payment is.”  I WILL NOT SEND PAYMENTS ELSEWHERE, PAY FOR ANY OF YOUR OTHER NEEDS, MAKE TRAVEL ARRANGEMENTS, OR MAKE OR PAY FOR YOUR FURNITURE and SHIPPING”.

I bundled the entire email including pictures and had it ready for anyone that responded to me.  It seems that it did not matter how many times I would tell these scammers the same thing, they would still send the same type of email or modify it a bit and again, send me the email.

And finally:

I received 3 overnight packages. One was a check printed on an old INK-JET color printer with a COPY signature. Another one- was a regular check from a bank account, which had been inactive for years with a negative balance, and one that I cannot even describe because it was screaming FAKE from miles away.

I immediately contacted the “SECURITY” departments of banks that was stated on the face of the check and shared the information.  One of the banks already knew and the other was glad to hear from me.  The third, I did not even bother, because it was too fake to waste time on. 

Now, one of the idiots who sent me the checks, also sent me a “fake” official-looking document that accepting these check and not complying with the terms of the agreement would cause criminal prosecution upon me.  Oooh, very scary!!!  As soon as I read it, I could not stop laughing.  Of course, for those of you out there, this is a way for the scammers to present themselves as legitimate business people wanting to make you scared that if you “DEPOSIT” the check, you MUST immediately take money out for the overage and send it to the destination they provide, or they will press criminal charges.  What a bull.   J

Let’s not forget, these checks were NOT the type I asked.  They were personal or company checks when I asked for Bank Cashier Check.  Every one of these checks was for thousands of dollars over the amount of my required payments.  The interested parties (scammers) wanted me to deposit the checks and take money out-of my account (for the difference between what I asked and what was writing on the check) and Western Union the difference to some location OUT-SIDE the U.S.

I am certain you got the picture.

Now allow me to shed a little light over check processing.

I send you a check.  Whether it is legitimate or fake, whether in-state or out, it must be deposited, except if you take it to the issuing bank (the bank that is on the face of the check).  If you take it to the issuing bank, the bank can cash the good check, if the funds are available. Otherwise, you have to take the check to your bank, make the deposit, and hope and pray it will remain good until it clears the issuing bank.

Let’s not forget the following issues:

1.    You deposit this check, take some money out and then I stop payment a couple of days later (immediately before it hits my bank).  You lose.

2.    I will even let the check clear my account. Then, I contact my bank and dispute that the payment was issued to a wrong party.  Most banks do NOT allow these types of disputes, but believe me, it can BE DONE.  You lose again.

I hope I am making some sense here.  Just like you tell your young ones, “Do not take candy from strangers,” follow the same rule and don’t accept what looks to be like candy from strangers.

Recently, I went to another great and helpful site for consumers and advertised my Chinese Crested puppies.  Again, I was stormed by similar emails and a check delivery, even though I repeatedly forwarded my FAQ, my funds acceptance policies and pictures of the puppies.

So, good boys and girls, do NOT accept fake checks, rush to the bank, drain your account, and forward money to some stranger somewhere-cluelessly.   Some of these “fake” checks look so good that even your bank managers (experienced bankers) may get fooled.  Therefore, this is my suggestion.

When you receive a check from an unknown entity, take your time, find the issuing bank, call them or drive there (if in your neighborhood), and share all the information about the check. Show the check and let the bank certify that it is a legitimate check.  Otherwise, send the check back and ask for cashier/certified U.S. bank check).

With love and best wishes,

Mike Samadi

Any questions?  Go to Q & A of http://www.MasterCreditRepair.net, read and post.  Go to the “Comment” page and post your story or comment.  Your information will remain confidential.  Joint my membership club (coming soon).



MONROE

Ken Charnly asked:


Just because you have filed for bankruptcy, you should not give up on your dreams of owning your own home. There are mortgage companies that will give you a home loan after bankruptcy. These lenders specialize in bankruptcy home loans and work with people in most any financial situation. Most bankruptcy home loan companies require that you have a minimum of 500 on your credit score. If you fall in this category, these lenders will work hard to customize a home loan that will work for your individual needs.

* If you are seeking a home loan after bankruptcy, you should know you will only be eligible for 80% financing. This means that you must come up with the remaining 20% and it will be used as your down payment.

* You should know that your debt to income ration will need to fall within the 45-50% range when you are seeking a bankruptcy home loan.

* Lastly, you should know that the interest rate on your loan will be higher than a typical mortgage.  However, do not let this stop you from purchasing a home. As time passes and your credit rating improves, you can refinance your home for a lower interest rate.

Everyone dreams of owning their own home, just because you have been declared bankrupt in the past there is no reason to stop dreaming.

Your past mistakes should not affect the living situation of your children for the next eight years.

There are now many mortgage lenders who are reaching out and offering individuals who have filed bankruptcy a way to purchase their own home. No one wants to see a family of four living in a cramped, two-bedroom apartment.

Do not feel that that your bankruptcy has backed you into a corner and that you have no other option but to rent. That is no longer true, you can turn that rent money into an investment for your future.

 



ZANE

Kris Koonar asked:


Many people have little idea about the finer details of a foreclosure. Most wait for the creditor to come knocking at the door to try and access some information about foreclosure.

The following are some Frequently Asked Questions or FAQs, which usually arise:

Q. What is a foreclosure?

A. Usually, when banks make an attempt to recover money owed, it is based on promissory notes after selling the collaterals. In simpler terms, the money you borrowed in order to refinance or buy a home is given to you only under the promise that you will repay in time or the house would be confiscated.

Q. Does the bank has the right to kick me out of my house?

A. No. Only court orders can give anyone the right to ask you to leave your home. Eventually, you might be forced to leave, but there are court-procedures that the mortgage holder is expected to abide by.

Q. Can you explain the pre-fore closure steps?

A. Pre-Foreclosure follows:

. Customer missing the mortgage payment.

. Bank sending a late notice.

. Customer missing the additional payments as well.

. Bank trying to contact the customer over the phone and through mail in writing and via the phone to contact the customer and resolve the situation.

. No agreements, but the customer continues to default.

. Bank demanding for payment under the note in full. This is based on the acceleration clause.

. No arrangements or payments acceptable to the bank are made.

Q. What makes a workout better for me?

A. Workouts allow a person to avoid the credit and emotional scars caused due to bankruptcy. In the case of people with hard assets like real property, workouts allow them to retain greater control and increase possibilities of retaining the assets. Soft assets like cash can also be secured.

Q. What are deficiencies?

A. Suppose you make a promissory note of $ 100,000 to the bank. This is loaned to you for recovering or buying a new house. You owe the bank $100,000. After five years, you go through a foreclosure and the bank acquires $ 90,000 after sale, but you still owe them $10,000 more. This is called a deficiency. In addition to the $10,000, other charges like the legal and foreclosure charges applicable will also be added. Very often the deficiency becomes an unsecured debt after foreclosure.

Q. How can a person work out the unsecured debt?

A. A common way of working out unsecured debts is to pay them off in lump sum amounts. This is done to establish a long-term payoff plan. This policy also applies to credit cards.

Q. How would a person know what is the best option?

A. This is a very complicated question and the answer depends on the assets a person owns, income, liabilities, expenses and the other underlying reasons for foreclosure. Solutions depend on the type of mortgage a person has opted for and how he plans to save the house.

Q. Do the potential bidders and attorneys have to come inside the house during a foreclosure sale?

A. No. Mostly, they limit themselves to the front lawn. You could opt to invite them inside the house, but there is no such obligation. If the debtor feels that he is about to lose the house and would be left with no deficiency, he may choose to invite the attorneys and bidders inside the home.



DEWEY

Bill Ross asked:


How does real estate investing work in building wealth? The answer is investment strategies of your own. This scenario can be considered as a long-term investment when you buy and hold property to rent or lease to a tenant together with an option to buying. Rent option involves finding a specific property, making its condition ready for rent, and then marketing it to possible tenants. This investing strategy offers plenty of profit opportunities. When the monthly rental given to you is more than the mortgage and other necessary expenses, you can create cash flow. Wealth will be built through tax advantages, tenants paying down your mortgage, and property appreciation. At the same time, lease options can be created by leasing the property for 12 months or more, also with an option to buy. Income from lease options includes tax advantages, profit from sale, monthly cash flow, and upfront option fee income.

The investor will select not to resell the property after purchasing a real estate investing property, but the investor select to give it on rent or lease the house for monthly rent. In many cases immediate profit done not yield this method is a real property investing because the investor still pays a mortgage on the property. There are some instances when an investor has completely paid for the property and then rents or leases the property. In these cases, the monthly rent for the property is all profit for the investor. Few people know what is real property investing entails instead many people have head about it, in fact, most knowledge about investing in real estate only extends to the point that it has something to do with making money in houses. Indeed, the simplest explanation of real property investing is that money is made through the purchase and resale of real property.

The commonly used investing strategy that is purchasing foreclosed and pre-foreclosed homes. Investors can purchase foreclosed homes from an auction by bidding on it. The higher the profit an investor is able to make, lower the bid. Investors can provide capital to the homeowners to keep their homes from being foreclosed. In this situation, the investor takes the place of the mortgager and allows the homeowner to pay a lower monthly price for the home this is another real estate investing strategy is offering assistance in pre-foreclosure situations.

To do this an investor either has to purchase the property at a price much lower than market value. Or, the investor can make some enhancements to the house to improve its equity and then resell it. Almost every investor has considered putting money into real estate at some point in time. It is an attractive investment because it is easily leveraged through mortgages to maximize the potential returns, tends to consistently appreciate more than stocks, and has predictable cash flows. However, investing in real estate is not that simple. Only 5% of people do something when they attend in investing courses. 95% will never offer a deal for a property.

One of the real estate investing secret is to purchasing a distressed property is the most popular ways to purchase a property for cheap keep the properties on track and find the good ones and if you want success, you’ve got to have the interest and time. Because of the appearance, condition, or the financial situation of the owner distressed properties usually have some negative affect on their value. Real property investors can purchase distressed properties for a low price by doing some work to fix them up and then resell the property at market value for a profit.



ARNOLD

Peter Collins asked:


Can Making Home Affordable help me if my loan is not owned or securitized by Fannie Mae or Freddie Mac?

 

Yes. Making Home Affordable offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage servicers with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

 

How do I know if I qualify for a Home Affordable Modification?

 

To apply for a Home Affordable Modification, you must:

 

Be an owner-occupant in a one to four unit property, and have an unpaid principal balance that is equal to or less than $729,750 (for one unit properties and higher for two to four unit properties (consult your servicer),

 

Have a loan that was originated before January 1, 2009.

 

Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income, and have a mortgage payment that is no longer affordable, perhaps because of a significant change in income or expenses.

 

If you answered YES to all of these questions, you are eligible to apply for a Home Affordable Modification. Only your servicer will be able to tell you if you qualify.

 

What if I don’t qualify or my lender is not participating in the Home Affordable Modification Program?

 

While 3-4 Million Homeowners are expected to qualify and most major lenders are expected to participate, in the event you cannot participate in this program, we are an ethical, full service Loss Mitigation firm dedicated to helping homeowners retain their homes. Contact us today at 1-877-467-3588.

 

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?

 

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because they have had or will soon have a significant increase in their mortgage payment that they cannot afford. If you have had or anticipate a significant increase in your mortgage payment or have had a significant reduction in income, contact your servicer. If you meet the minimum eligibility criteria for a Home Affordable Modification, your servicer is required to evaluate your loan to see if you are at risk of imminent default.

 

I have missed some mortgage payments am I eligible?

 

If you answered yes to the questions above, have missed two or more mortgage payments and your servicer is participating in the Making Home Affordable Program, your servicer must evaluate your loan to determine if you qualify for a modification.

 

I have a second mortgage. Am I still eligible?

 

Yes, but only the first mortgage is eligible for a modification under Making Home Affordable Loan Modification Program.  Any negotiations on the second mortgage would be between you and your lender and does not affect the federal guidelines.

                                              

How do I know if my servicer is participating? Are all servicers required to participate?

 

Servicer participation in the program is voluntary. However, the government is offering substantial incentives to servicers and investors, and it is expected that most major servicers will participate. Participating servicers will sign a contract with Treasury’s financial agent, through which they agree to review every potentially eligible borrower who calls or writes asking to be considered for the program. As contracts are signed, a list of participating servicers will be available on the Internet at www.FinancialStability.gov. Participation will be mandatory for any servicer that accepts future funding from the Treasury’s Financial Stability Program.

 

 

What will my servicer do to determine if I qualify?

 

Your servicer will:

 

Determine that your loan meets the minimum eligibility criteria (owner occupied, originated before January 1, 2009, UPB equal to or less than $729,750). If yes:

 

Obtain sufficient income information to determine if your monthly mortgage payment is more than 31% (approximately 1/3) of your gross or pre-tax monthly income. (Your servicer may initially accept verbal information about your income, but eventually you will need to provide proof of income in the form of tax returns and pay stubs). If yes:

 

Add past due charges (interest, taxes, insurance and costs that your lender paid to other parties on your behalf – but not late fees, those must be waived) to the loan balance.

 

Determine how much of an interest rate reduction will be required to get your mortgage payment down to a point where it is about 31% of your gross monthly income.

 

Apply a test to determine if the cost of the modification (including the government’s incentive payments) is less costly for the investor than a foreclosure. If yes:

 

Put you on a trial modification for three months at the new interest rate and payment.

 

If you successfully make the payments and are current at the end of the trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.

 

The modification payment will also include a monthly amount to be set aside (escrowed) to pay taxes and insurance when they become due. This escrow is required even if your prior loan was not escrowed.

 

What happens after five years?

 

If the modified interest rate is below the market rate, the modified rate will be fixed for a minimum of five years as specified in your modification agreement. Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the rate cap indicated in your modification agreement. The cap is equal to the prevailing market interest rate on the date the modification is finalized as published by Freddie Mac based on a survey of its customers. This cap means that your rate can never be higher than the market rate on the day your loan was modified. If the modified rate is at or above the prevailing market rate, the modified rate will be fixed for the life of the loan.

 

How low can my interest rate go?

 

Treasury is providing incentives to your investor to write the interest down as low as 2%, if necessary to get to a payment that you can afford based on your income.

 

What happens if that is not enough to get to an affordable payment?

 

If a 2% interest rate is does not result in a payment that is affordable (31% of your gross monthly income), your servicer will:

 

First try to extend your payment term. At the servicer’s option your payments could be extended out to 40 years.

 

If that is still not sufficient your servicer will defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance.

 

A portion of the debt could be also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.

 

Could I end up with a balloon payment?

 

Yes. If your servicer determines that a principal forbearance is required to get your monthly payment to an affordable level, the amount of the forbearance. Say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money. You would have a $20,000 balloon payment that had no interest and was not due until you paid off your loan, refinanced or sold your house.

 

Is housing counseling required under this program?

 

Borrowers, especially delinquent borrowers are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan. These services are free. However, housing counseling is only required for borrowers whose total monthly debts are very high in relation their incomes, and it is voluntary for others.

 

When you apply for a Home Affordable Modification, your servicer will analyze your monthly debts, including the amount you will owe on the new mortgage payment after it is modified, as well as payments on a second mortgage, car loans, credit cards or child support. If the sum of all of these recurring monthly expenses is equal to or more than 55% of your gross monthly income, you must agree to participate in housing counseling provided by a HUD-approved housing counselor as a condition of getting the modification.

 

I heard the government was providing a financial incentive to borrowers. Is that true?

 

Yes. Borrowers who make timely payments on their modified loans will receive success incentives. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. Over five years the total principal reduction could add up to $5,000. This contribution by the Treasury will help you build equity faster.

 

I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for a Home Affordable Modification?

 

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage servicer will check to see if the dwelling is your primary residence.

 

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

 

Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.

 

I have two mortgages. Will a 2009 Obama Mortgage Relief Plan reduce the payments on both?

 

Only the first mortgage is eligible for a modification.

 

I owe more than my house is worth. Will a Home Affordable Modification reduce what I owe?

 

The primary objective of the Making Home Affordable Program is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Investors may, but are not required to, offer principal reductions. However, it is more likely that your servicer will use interest rate reductions in order to make your payment affordable.

 

I have an FHA loan. Can it be modified under the making Home Affordable Program? Are all loans eligible?

 

Most conventional loans including prime, subprime, adjustable, loans owned by Fannie Mae, Freddie Mac, private lenders and most loans in mortgage backed securities are eligible for a Home Affordable Modification. The Administration is working with the Congress to enact legislation that will allow FHA, VA and USDA to offer modifications consistent with Making Home Affordable in the near future. Currently loans insured or guaranteed by these agencies are being modified under other programs that also enable borrowers to retain homeownership.

 

What should I do if my servicer tells me that the “investor” is not participating in Making Home Affordable?

 

As contracts with servicers and investors are signed, the list of participants will be posted at www.financialstability.gov. Borrowers should first check there to see if their servicer is listed. If so, you should call your servicer back and ask to speak to a supervisor or you may contact a HUD-approved housing counselor for assistance. If your servicer is not participating in the program, you should ask your servicer or a housing counselor about other workout options that may be available.

 

I’m already working with my servicer or a housing counselor on a loan workout. Can I still be considered for a Home Affordable Modification?

 

Yes. You should ask your servicer or counselor to explain the benefits of all available foreclosure prevention or payment reduction options. A Making Home Affordable Modification is one of many valuable tools available to your servicer. Other options may be more appropriate for your situation.

 

How do I apply for a modification under the Homeowner Affordability and Stability Plan?

 

If you meet the general eligibility criteria for the program, you should gather the financial documentation that your servicer will need to determine if you qualify. Once you have this information, you should call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.

 

If your loan is current, please be patient. Treasury just published detailed program requirements on March 4, 2009 and it will take some time before servicers are fully operational. However, the Treasury has encouraged servicers to immediately begin reviewing the eligibility of delinquent borrowers that are at the greatest risk of foreclosure.

 

If you have already missed one or more mortgage payments and have not yet spoken to your servicer call them immediately.

 

What information and documents will I need?

 

It will help your servicer and speed processing of your application if you gather the some information and documents before you call. You will need:

 

Information about the monthly gross income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.

 

Your most recent income tax return.

 

Information about your assets

 

Information about any second mortgage on your house.

 

Account balances and minimum monthly payments due on all of your credit cards.

 

Account balances and monthly payments on all your other debts such as student loans and car loans.

 

A letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).



EZRA

Alan Lim asked:


What is refinancing and what types are there?

Refinancing is simply the process of getting a new home mortgage to replace your existing one. There are various loan terms available for you to choose from. The most common ones are the 5, 10, 15, 20, 25, 30 or even way up to 40 to 50 years.

Is it financially safe to get a new home mortgage?

Refinancing can most likely lower your current interested rate to an adjustable or fixed mortgage. That said, refinancing may well be the solution to your financial problems. Refinancing also allows you the chance to change from your current adjustable rate to a fixed rate and vice versa. It can also allow you to take some cash out from your equity, lower your interest rates and your overall monthly mortgage payment. These benefits can be enjoyed only with refinancing, but at the expense usually of longer, renewed mortgage terms.

How much do I pay for refinancing?

Getting a new home mortgage may cost you some fees and charges which may include application fees, appraisal and legal fees, closing and other related charges. There are lenders who offer low cost, or even “no cost” refinancing at the cost of higher interest rates, or deductible from the lump sum mortgage to be issued. It is not really “free” per se, but you do not pay up front for the mortgage.

Is it a good idea for me to refinance?

It may or may not be a good idea to refinance. The answer to this depends on individual circumstances and your financial goals. Refinancing may be a good idea if you want to lessen your monthly payment or reduce your interest rates. However, you should consider other factors as well such as your length of stay in your home, the points you are willing to pay, your home equity, and so on.

Is it necessary that I pay points to get lower interest rates?

The choice of whether to buy points is also entirely up to you, depending on what you want to achieve. Points are usually tax deductible in small increments. You can use this to your advantage as well.

How long will it take me to get a new home mortgage?

Refinancing usually takes about two weeks to a month depending on a few factors. If you had a fairly recent home appraisal, or if you can get appraisal service easily, you can refinance as soon as just a little over a week. During refinancing peak seasons, it might be difficult to get an appraisal, and you will experience delays in refinancing.

How do I shop for a great new home mortgage deal?

Try to get in touch with at least three lenders and check on each of their loan terms, programs and rates. You can do your canvassing online or through phone.

Can I still refinance even if my credit rating is not so good?

Yes, by all means, do so. The loan terms you will be given may not be as attractive as when you have a good rating, but it relatively can match it well.



JOSH