It is understandable to have
questions when coping with a new and challenging situation, especially
when a home is at stake. The reality is that millions of homeowners
across the country are finding out that they have more questions than
answers. We hope that the following information will help you better
understand the circumstances. If you have further questions not
addressed below, or would like additional information resources, feel
free to Contact
Us
Do I qualify for a short sale?
The qualifications for a short sale
include any or all of the following:
- Financial Hardship – There is a situation causing you to have
trouble affording your mortgage.
- Monthly Income Shortfall – In other words: “You have more month
than money.” A lender will want to see that you cannot afford, or soon
will not be able to afford your mortgage.
- Insolvency – The lender will want to see that you do not have
significant liquid assets that would allow you to pay down your
mortgage.
What is a mortgage modification?
A mortgage modification is a
process through which your mortgage lender changes any or all of the
following:
- Your interest rate
- Your principal balance (through a reduction)
- Your loan terms (example: from an adjustable to a fixed
rate)
This process can allow borrowers to
stay in their property when they can no longer afford their current
mortgage payments.
Why would a lender modify my
mortgage?
Lenders have realized that in some
cases it is better for them to work with current borrowers to lower
payments or possibly improve terms in order to keep homeowners in their
properties. The average foreclosure can cost a lender from 35-50% of the
value of a property, so keeping borrowers in their homes is a good
option for everyone.
What do I need to qualify for a
mortgage modification?
According to the Making Home Affordable Web site
you will need the following information for your lender to consider a
modification:
- Information about your first mortgage, such as your
monthly mortgage statement
- Information about any second mortgage or home equity
line of credit on the 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
- Your most recent income tax return
- Information about your savings and other assets
- Information about the monthly gross (before tax) income
of your household, including recent pay stubs if you receive them or
documentation of income you receive from other sources
If applicable, it may also be
helpful to have a letter describing any circumstances that caused your
income to reduce or expenses to increase (job loss, divorce, illness,
etc.)
How do I qualify for a mortgage
modification?
The first call you make should be
to your lender, have the information above ready to discuss with them
and call your customer service line to ask them what options you have
available. If the person you speak with does not understand what you are
asking, you can ask to be referred to one of the following departments
(different lenders have different names for these departments):
- Loss Mitigation
- Mortgage Modification
- H.O.P.E.
Prior to contacting your mortgage
lender complete an eligibility test at www.makinghomeaffordable.gov.
This test will inform you of your eligibility for a modification
through the government-sponsored Home Affordability and Stability
Program (HASP). For a list of mortgage lenders and servicers, visit www.hopenow.com.
What if I don’t qualify for a
mortgage modification, can’t afford my home, and owe more than it’s
worth?
You are not alone and foreclosure
is not the only option. If your mortgage lender or servicer will not
work with you to reduce your payment, you may want to consider a short
sale. Our agents at Atlantic
Realty, have undergone extensive training in how to process and
negotiate short sales. A short sale allows you to sell your home for
less than what you owe and avoid foreclosure. Speak to your market
expert to see if you may qualify.
What is a Home Affordable
Refinance?
If Fannie Mae or Freddie Mac owns
your mortgage, you may be eligible for a Home Affordable Refinance. This
will allow you to refinance your home and often lower your payments.
What are the qualifications for a
Home Affordable Refinance?
According to the resources
released by the government, following are a list of qualifications:
- You are the owner occupant of a 1 to 4 unit home
- The loan on your property is owned or secured by
Fannie Mae or Freddie Mac.
- At the time you apply, you are current on your
mortgage payments (you haven’t been more than 30 days late on your
mortgage payment in the last 12 months, or if you have had the loan for
less than 12 months, you have never missed a payment)
- You believe that the amount you owe on your
first mortgage is about the same or slightly less than the current value
of your house
- You have income sufficient to support the new
mortgage payments, and the refinance improves the long-term
affordability or stability of your loan