Are you stressed out about mortgage payments? Do you think your only option is a foreclosure? Is a loan modification right for you? How can you help yourself?
Millions and millions of homeowners are asking themselves the same questions. It is projected that over 20,000,000 homeowners will have negative equity in their homes in the very near future. In other words, they will owe more on their homes than they are worth. Over 2.9 million homes have foreclosed in the last three years and the number is only expected to grow. Expect the effects of the real estate market to ripple for years to come.
What can you do now?
If you have investigated the value of a loan modification, or even if you don't fully understand what a loan modification is, don't worry. There is help available, However and this is a REALLY BIG however. Never ever, never, hire a so called loan modification or foreclosure specialist to do a loan modification for you. They will charge you thousands of dollars to do what you can and should do on your own for yourself. It is not that difficult to do.
Loan modification companies now occupy countless blogs on the internet, almost every commercial break on the radio and now even television commercials. Some are lawyers, some are not. Both groups seem to be spouting the same message to the same people. Seeking a trusted ally to guide you through the troubles ahead, homeowners often jump at the chance to call an 800 number spouted on the radio or click a link on Google when you perform a search in hopes of saving you from the perils and loss of something so important.
All too often homeowners believe that completing a Loan Modification is an intricate process and requires professional help. Regardless of the intricacies consumers must first answer the question: Do I need to hire someone to get a loan modification? The most honest answer I can give, having worked with all major lenders and hundreds of homeowners is, absolutely no.
Modifying your loan is something you can do on your own. In fact, in some cases you are better off doing it on your own. Aside from costs associated with hiring someone, no one will care more about your home than you. Additionally, there are some fantastic non-profit agencies that actually provide free assistance. Yes, they are swamped, and therefore not always able to meet the needs of everyone, but for some, it is a fantastic option.
Loan modifications are saving homes from foreclosure. At the present time more loan modifications are being done than mortgages. You just need to know how to do it. President Obama has instituted his new 'Foreclosure Prevention Plan.' It has made applying for a loan modification much easier for every homeowner to do on their own. There are even incentives for both the homeowners and the lenders built into his $75 billion dollar plan.
Here is a quick example to see how you can potentially save money with a loan modification.
When applying for a loan modification, your debt-to-income (DTI) ratio is the key to calculating an affordable house payment. President Obama's foreclosure prevention plan sets the target front-end DTI for the first mortgage at 31 percent. In other words, your house payment or PITIA (principal, interest, taxes, insurance, and homeowner association fees) cannot exceed 31 percent of your gross monthly income. The DTI ratio comes in two flavors:
o Front-end DTI ratio is based on your house payment. (Under the Obama plan, the front-end DTI target of 31 percent accounts only for the first mortgage. If you have other loans against your home, such as a second mortgage or home equity line of credit, you account for those separately as part of your back-end DTI.)
o Back-end DTI ratio is based on all monthly debt payments combined, including your house payment, credit card payments, payments on auto loans, and other loan payments.
Let's use an example; suppose your present monthly payment on your mortgage is $ 2,200.00 (including principal, interest, taxes, insurance, and homeowner association fees). Now let's assume your monthly gross income (before taxes) is $ 5,000. Using the DTI target of 31% as stated above, your expected new monthly mortgage payment will be $ 1,550 per month. You will save $ 650 per month. Here is how. Take your gross monthly income of $ 5,000 and times it by 31%. The result is $1,550.
Remember, this was only an example and there is more to it than that. However, the rest of the process is just as easy to learn and apply. You just have find out how. There are many resources available to consumers to complete a loan modification on your own. There are free loan modification kits online and free self help articles available.
Remember the REALLY BIG however above. Don't pay someone thousands of dollars to do what you can do for free.
Save your money to...Save your home.
Jules Marcel is an accomplished Loan Modification and Forensic Loan Audit professional. He has written many articles on the loan modification process. His website [modpro.info] provides a free Loan Modification Success Kit to help distressed homeowners. He can be reached at 516-499-7917 for a free consultation to help you save your home.
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