How to Avoid Foreclosure – Or – Can’t Refinance? Maybe It’s Time to Modify Your Loan

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How to Avoid Foreclosure - Or - Can't Refinance? Maybe It's Time to Modify Your Loan

The real estate market has been stable and climbing for over a decade, whenever a homeowner’s mortgage needed to be addressed for any reason, refinance was the initial thought. Refinancing was effortless; the diversity of loan products available was unending. Effortless money coupled with an enlargening market gave homeowners the capability to take cash out when needed, lower their interest rate, fix their interest rate, as well as a number of other options.

In today’s declining market, effortless money is a thing of the past. Refinancing is available to only a select few. Nowadays, attempting to get approved for a refinancing is enormously difficult. Wall Street is no longer purchasing loans from originators and banks, lenders have slashed programs and applied stringent requirements for qualifying for a refinance. Without a government ensure to buy the loan, most bankers and lenders will not make the funds available for a loan.

The FHA, Fannie Mae, and Freddie Mac are being spread to the limit and can’t possibly keep up with the request. As a result their underwriting criteria have tightened and the money supply has also. Fresh homebuyers and current homeowners looking to get financing must have excellent credit, slew of equity, job stability, disposable income, assets galore and proof of all of the above. If any of these conditions can’t be met, getting a loan is next to unlikely.

When you have little or no equity, there is no option to refinance. This is true for all borrowers, well qualified or not.

You don’t always have to pay massive closing costs to reduce your mortgage’s interest rate.

In this type of market, loan modification is the only way to achieve a switch in your loan terms that will make it livable. Explore this course and put it to work for you.

Brainy homeowners can “modify” their mortgage by negotiating with their existing lender for a diminished interest rate, or re-amortization of their current loan. Some homeowners who are upside down in their loans may even be able to negotiate a principal balance reduction.

For the time being at least, lenders are approving almost 90 percent of loan modification requests. If it’s decently ready and makes sense, they’ll most likely approve it the very first time through. Unluckily, if your request is messy, missing information or just not very clear they will set it aside and budge on to the next one. They’re just inundated with loan modification requests right now.

Loan modification is a laborious process, but the prizes are well worth the time and energy spent negotiating.


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