If you have a mortgage that you are having trouble paying or that is “upside down” we can help you through the maze of options that are available to you.
What options are available for problem Mortgage Loans?
- Loan Modification
A Loan Modification can reduce your loan payment down to 31% of your gross income. This is done by applying through the HAMP program that modifies the terms of the loan in various ways, depending on your loan.
- Lower the interest rate not lower than 2%.
- Extend the term. At the servicer’s option, the term could be extended up to 40 years.
- Forbear (defer) principal. If your payment is still not low enough, your servicer may defer a portion of the principal amount you owe until the maturity of the loan. This is called a principal forbearance. With a forbearance, you will still owe the principal; but repayment is deferred until a later date. This could result in a balloon payment.
- A portion of the principal could be also be forgiven. This is optional on the part of the servicer. There is no requirement for principal reduction or forgiveness, and there is no guarantee that your servicer will offer principal reduction or forgiveness.
Before the loan is permanently modified the servicer will give you a trial modification, usually for 3 months to see if you are able to make payments and to stop any foreclosure. Your loan can only be modified after you have made all of your trial payments on time and you have sent all required documentation.
NOTE: All modified loans must include an escrow for taxes and insurance.
If you qualify for a refinance, HARP can help you:
- Lower your interest rate. The new rate will be based on market rates in effect at the time of the refinance and you will be subject to any associated points and fees quoted by your lender.
- Lower your payment.
- Avoid a “balloon” payment.
- Convert to a fixed rate loan.
- Save money over the term of the loan.
- Refinancing into a more stable fixed-rate loan product and avoiding future mortgage payment increases would likely improve your ability to make your mortgage payments over the long-term.
Refinancing will NOT reduce the principle amount you owe. The objective of a refinance under HARP is to help homeowners get into more stable or more affordable loans.