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Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?

Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?

loan modification should i trust my bank Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?If you’re having trouble keeping up with your mortgage payments, then perhaps a mortgage loan modification might be the answer. A loan modification can reduce your monthly mortgage payments and help you keep current with your mortgage based upon your financial means. However, when you talk to your bank or mortgage lender about a modification, are your or the bank’s best interest involved?

The bottom line is the answer to this question. The bottom line for the lender is to make income in the form of interest on money they lend to others. If a borrower fails to make payments as agreed in the mortgage terms, then the lender may have no choice but to foreclose on the home and recoup their losses on the resale of the home. Usually a foreclosure is a great expense to the lender in attorney’s fees, filing fees, and losses incurred while holding the property for sale. All efforts to avoid foreclosure should be taken by the lender, including modifying the loan in extreme cases to help a borrower repay the loan.

Getting Professional Modification Help

Although foreclosures are not desired by lenders, they still have many strict guidelines in making and modifying mortgages to suit the owners and investors of the lending company. Subsequently, it may appear ironic that lenders want to avoid foreclosure, but are also not willing to work with borrowers to negotiate a reasonable settlement for both parties.

A professional foreclosure help specialist company can help you with a loan modification by talking to your bank directly and working with them on your behalf to resolve a mortgage into more affordable terms. These companies are usually run by experts in the mortgage finance industry and present many advantages over a DIY endeavor:

Experience – Many of these professional modification negotiators have been operating for years and have extensive experience in negotiating new mortgage terms. They are familiar with the foreclosure and loan modification process and know what it takes to reach a deal, with even the most stubborn lenders.

Contacts – Foreclosure help specialists usually work with the biggest loan mortgage companies in the country and have many contacts within each. By having and continuing good relations with lenders, they have an upper hand in renegotiating your contract.

Results – In most cases, foreclosure help can secure an agreeable mortgage modification that is acceptable by both lender and borrower. If not, then they can work with the lender on an exit plan to avoid foreclosure by a short sale. In a short sale, you may end up selling your home for less than is owed on the mortgage, but the lender accepts the short amount and writes off the balance. This bodes much better for your credit report than foreclosure.

 Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?

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FICO 101:  How to Improve Your FICO Score (Credit Score)

FICO 101: How to Improve Your FICO Score (Credit Score)

improve your fico score FICO 101:  How to Improve Your FICO Score (Credit Score)Almost every working American has a FICO score. Anyone with a Social Security number, a job, and any kind of debt is likely to have a record with one or all of the three major credit reporting agencies. This credit report history results in an algorithmic score that rates each individual’s creditworthiness. A higher FICO score means that a person is responsible in acquiring and paying debt, while a low score tells potential creditors that a person is a higher risk.

How is a FICO Score Determined?

Your FICO score is an algorithmic mathematical weighted formula. Your credit history shows how many creditors you have, what your credit limit is for each creditor, how much of your limit you have used, and also whether you pay on time and as agreed or have made late payments in the past.

Serious credit issues, such as repossession, foreclosure, and collections, will also show on your credit report, as well as financial judgments from a court of law. All these critical aspects are scored by their importance to provide a single number of your creditworthiness.

What Affects My FICO Score And How Can I Protect It?

Your FICO score must be treated with care, much like a pet. It needs constant nurturing, maintenance, and sometimes, it must be treated by a professional and bandaged for repair. A credit history can be damaged by anyone who reports your credit activity to the reporting agency without your consent. Subsequently, it is paramount to treat your creditors with respect and pay them as agreed.

Your credit report and FICO score can be damaged by the report of any of the following:

• Late Payments – If you miss a scheduled payment on a credit card, auto, or home mortgage payment, it will show on your report. Late payments are noted as simply late, and in increments of 30, 60, and 90+ late. The more days late your payment is, the lower your credit score. In fact, your credit score can drop almost overnight.

CREDIT TIP: Even if you cannot pay your creditors, you should make arrangements right away when you experience financial difficulty. Try to work with your creditors regarding a payment plan, which may prevent them from reporting a late payment on your credit score.

• Over Limit – Your credit card companies will report your maximum credit limit. If you charge more than that limit, your report will reflect it.

CREDIT TIP: Always stay well below your credit limit. Conventional wisdom says to keep your charged credit at 2/3 or below your limit for each creditor.

• Collection – If you fail to make payments for a period of time on a credit card or other debt, your account will close and be sent to a collection agency. Your credit report will show both the account closure and the new reporting by the collection agency, adding even more damage to your credit.

CREDIT TIP: Avoid collections by working with creditors directly. If you do end up in a collection account, pay it in full as soon as possible. The worst thing you could do is avoid the creditors and collection agencies.

How Can I Improve My FICO Score?

If you have had past credit issues that affect your FICO score, there are strategies you can implement to start improving your score today.

• Payoff All Problem Credit – If your FICO score is affected by negatively closed or collection accounts, immediately pay them in full as soon as possible.

• Get A Secured Credit Card – If you’re unable to get an unsecured credit card, obtain a secured card with a deposit amount. Start making charges and paying your balance in full each month. This will help build your history of reliable monthly payments.

• Get A Personal Loan – Many banks and credit unions will allow you to obtain a personal loan with a savings or CD deposit as security. Obtain a small personal loan, such as $1000, and keep the money in the bank – don’t spend it! Immediately make the first payment and continue making regular payments each month thereafter. Your bank will report your good payment status, and your FICO score can start improving.

Credit is one of the most important personal issues for every consumer. Your credit report and score can determine whether you can get a home loan, a new credit card, and even affect whether you get a job. Treat it with care and you will succeed in keeping your FICO score in a positive range.

 FICO 101:  How to Improve Your FICO Score (Credit Score)

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Why loan modification is a hot topic

Why loan modification is a hot topic

loan modification a hot topic Why loan modification is a hot topicOverview
Loan modification is not a new practice, however it is more common now due to the mortgage crisis, declining home values and the economic recession. When property values are remaining consistent or are rising, your ability to get a loan modification tends to be very difficult. When a home facing foreclosure has equity, the bank takes a minimal loss or no loss at all. With nothing to gain the bank has no interest in approving a homeowner for loan modification with a track record of financial difficulties. The lender can place the property in foreclosure, find a new homeowner who can make the payments on time and remain profitable. Banks do not want to engage in loan modifications or deal with a risky borrower in a stable economy.

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Declining property values combined with tougher lender guidelines and adjusting interest rates have resulted in the loan modification boom. No one is going to buy a home for 15%-30% above market value and no lender is going to refinance that property. Your mortgage, or mortgage-backed security, is the collateral for the note that a bank lends a borrower.

In the current economy, equity in homes has dwindled and, in many cases, has become negative. In lieu of foreclosure, banks would rather reduce the borrower’s mortgage payments and/or balance. Neither banks nor borrowers have power in these difficult times. In fact, banks and borrowers must work together to avoid foreclosure to not only keep families in their homes but also turn this recession around. Loan modification might mean immediate financial losses for our banking institutions, but the long-term mortgage payment losses are minimized versus mass foreclosures.

Millions of Americans have taken out high home equity loans against their mortgages in markets that were at the time appreciating but now have rapidly depreciated. Then, when the homeowner’s adjustable-rate mortgage (ARM) changes and the payment can no longer be made a bank will try to refinance the mortgage, only to discover there is little chance. Most homeowners believe their only option is foreclosure. Since they cannot make the payments, sell, or refinance, are there other options other than foreclosure? The first options that a bank gives are a short sale, deed in lieu of foreclosure, or forbearance agreement.

With so many homeowners wanting to keep their home and a vast supply of empty homes, the banks are forced to revisit their loan modification strategy. In today’s economy, banks are willing to engage in loan modification to keep people in their homes. They can reach many more homeowners by doing so and continue receiving monthly mortgage payments.

 Why loan modification is a hot topic

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Comparison Shopping: Loan Modification or Refinance

Comparison Shopping: Loan Modification or Refinance

loan modification or refi Comparison Shopping: Loan Modification or RefinanceOverview
For qualified homeowners that need to renegotiate the terms of their mortgage with their lender, a loan modification is a good option when properties values are dramatically declining. Loan modifications are the best recourse for homeowners looking to renegotiate the terms of their loans, because the homeowner is unable to make payments under the original agreement or because the value of the property is worth less than the homeowner owes on the mortgage. Loan modifications also serve the needs of lenders that would prefer to avoid foreclosure and a sale of the asset at a significantly reduced price.

Refinancing is advisable in a stable or increasing market. It gives homeowners the ability to take cash out when needed, lower their interest rate, and fix their interest rate, among other options. In today’s declining market, refinancing is available to a much smaller group of homeowners — only those who are current with their mortgage payments, have a strong credit history and job security, disposable income after all bills are paid, and significant equity in their property are eligible.

Comparison Shopping
Whether you will be able to refinance or qualify for a loan modification depends on your individual situation. Most homeowners interested in making a move in this market are the ones who are in trouble and therefore do not qualify for a refinance. If you are behind on your mortgage, always attempt a loan modification first. When a homeowner is late but can show the ability to pay a lower payment, the benefits from a loan modification will greatly outweigh that of a refinance. The interest rate on such a loan modification will generally be lower than that of an on-time homeowner with good credit who pays to refinance.

Getting approved for a traditional refinance is extremely difficult. Since Wall Street is no longer purchasing loans from originating banks, lenders have cut programs to less qualified homeowners. When considering refinancing in a market where equity has evaporated, causing balances to exceed value, there is no option to refinance. This is true for all homeowners, sub-prime as well as qualified homeowners.

If you are a homeowner that is upside down, you would have no option to refinance and your best bet would be to seek out a loan modification. If you are not late but are upside down, loan modification companies such as ours can make it a seamless and transparent effort that could potentially knock tens of thousands of dollars off of your principal balance. Who could argue with that?

 Comparison Shopping: Loan Modification or Refinance

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What is a Loan Modification?

What is a Loan Modification?

loan modification or refi1 What is a Loan Modification?

Overview
Loan modification is a process whereby a homeowner’s mortgage is adjusted and both lender and borrower are bound by the new terms. The mortgage terms are adjusted because the borrower is unable to make payments under the original agreement or because the value of the property is worth less than the borrower owes on the mortgage.

When homeowners fall behind on their payments, they are faced with a few very tough choices: foreclose, deed in lieu of title, short sale or loan modification. Loan modification is the only one of these options that does not force the borrower to vacate their home. Loan modifications are designed with three basic objectives in mind:

• Offer proactive workout solutions designed to address borrowers who have the willingness but limited capacity to pay.

• Provide borrowers the opportunity to stay in their home while making an affordable payment for the life of the loan.

• Ensure investor interests are protected; loan modification must always result in a positive net present value outcome for the investor; the cost of the loan modification must be less than the estimated cost of foreclosure.

Banks will allow certain changes to be modified for borrowers who can document the ability to repay the loan in a reasonable and sustained manner. The most common loan modifications are:

• temporarily or permanently lowering the interest rate,
• reducing the principal balance
• ‘fixing’ adjustable interest rates
• adding an interest only option
• increasing the loan term (i.e., from 30 to 40 years)
• a forbearance agreement
• forgiveness of payment defaults and fees

… or any combination of these changes.

Loan modifications are designed with payment levels so that the borrower can consistently make his mortgage payment as well as pay his other bills. Mortgage payments within an arranged loan modification are not intended to consume an entire monthly budget. Lenders will generally take the homeowner’s entire budget into consideration i.e. car payment, cell phone, utilities, credit card payments, and other necessary expenses needed to live a normal life while still maintaining a reasonable mortgage payment. With loan modifications, the benchmark ratio for calculating a borrower’s affordable payment is 38 percent of monthly gross household income.

A loan modification is a negotiation between your modification company and the primary lender (a bank or other financial institution). Your modification company will present the lender with a proposal backed up by your documented income and monthly expenses, which includes both hard and soft expenses. Soft expenses are difficult to document. Your modified monthly mortgage payment is determined by the difference between your total income and your expenses.
Great! I know what a Loan Modification is now. Do I Qualify?

Until you go through the process it is difficult to say if you qualify. Ideal candidates have a number of the following characteristics:

  • An interest rate above 6.9%
  • Unaffordable Payements
  • An Ajustable Rate Loan
  • Are Deliquent on Payments
  • Are Currently in Forclosure
  • Have Negative Equity in their Home
 What is a Loan Modification?

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