The Master Mortgage Blog

What President Obama's Federal Loan Modification Plan Means to Countrywide Mortgage Holders

2009-09-07T12:26:00.000-07:00

Countrywide mortgagees denied loan refinancing or modification in the past may find help under Obama's federal loan modification program. Whether you're just now seeking assistance from high monthly mortgage payments or if you've already applied, this new plan may interest you. This article will provide you with additional information about the new loan modification plan and its benefits and guidelines.

Because some applicants were denied under stringent lender guidelines in the past, at both Countryside and other financial institutions, President Obama designed a new plan to help four to five million American homeowners get assistance with their mortgages. Mortgage lenders are now being offered incentives by the government to participate in this program.

The U.S. Treasury Department has established guidelines for Countrywide and other lenders to follow when considering loan modification applications. That's why you are encouraged to re-apply for loan modification if you were rejected prior to President Obama's federal loan modification plan. Incentives for the homeowner could potential include an interest rate reduction up to 2% and a bonus for making all required payments, if qualified.

Position yourself at the front of the line of applications by gathering together your paperwork and information needed for your interview to see if you qualify for a loan modification under Obama's plan. The more prepared you are and the better you present yourself to your lender, the more likely you will be approved by Countrywide under the federal loan modification plan.

Preparing a Loan Modification Hardship Letter - Three Basic Points to Include

2009-09-07T12:24:00.001-07:00

A well-written hardship letter can make or break your ability to be approved for a loan modification. The hardship letter needs to lay out the reasons why you are facing financial difficulties and why you would be able to meet your mortgage obligations under revised terms.

Preparation is always the key to success, so preparing a checklist to guide you toward covering all aspects that need to be included in your hardship letter will increase your odds of approval. Below are the three key points that you need to include in your letter.

1. Explain why you are facing financial difficulties. Did you lose your job? Did you or a family number become seriously ill? Have you incurred an inordinate amount of medical expenses? Outline for your mortgage bank the circumstances that have put you in your current situation.

2. Create a chronology or timeline of your situation. What you want to be able to show the lender is that you weren't late or delinquent in payments until extenuating unexpected circumstances arose that caused your current financial crisis. You're showing the bank that you've been a responsible debtor up until the time of your financial hardship.

3. Develop a plan for your future. Let the lender know that you are a proud homeowner who wants to do everything within your ability to meet your debt obligations and continue to enjoy home ownership. If you plan to sell some items, let them know that. Outline a new budget for yourself and share that with the bank to show them that you are taking measures to protect your investment.

The key to loan modification approval is the hardship letter. By demonstrating to your lender that your current situation was beyond your reasonable control and making a promise to fulfill your future obligations, you will have a better chance of being approved for a mortgage loan modification.

Easy Advice For Home Loan Modification Hardship Assistance

2009-09-07T12:23:00.000-07:00

Hardship assistance in the form of loan modifications has been available for years, but it's the topic of conversation now more than ever since the Making Home Affordable (MHA) Act was introduced by President Obama. Unlike in years past, the process for applying and being approved for home loan modification is less inefficient and speedier. Investigate your options if you think that a home loan modification would assist you in your time of financial hardship.

It doesn't have to be the end or result in foreclosure if you're currently having difficulty making your monthly mortgage payments. If you apply for loan modification assistance before you hit rock bottom, you may be able to do something to save your home. A financial adviser can let you know your options, whether you hire one or schedule an appointment with a HUD-approved financial adviser for free counseling.

You have options available to you in terms of whether to choose a lawyer to assist you in obtaining loan modification approval and whether or not to use a free financial counselor or a paid adviser.

Whenever there's increased demand for a product, new providers seem to crawl out of the woodwork. Be careful when choosing a lender or financial advisor to assist you with your financial decisions and consideration of a mortgage modification. Check with colleagues and/or the Better Business Bureau to check out the lender before deciding to do business with them.

When meeting with your counselor for the first time, you will need to take all of your documentation they will need. You will need your financial statements, bills, and any other relevant paperwork for the loan counselor to review.

You and your counselor will work together to write a hardship letter if it's determined that loan modification is the best option for your particular situation. A hardship letter explains to your lender what caused your financial difficulties (Divorce? Job loss? Medical bills?) and lay out your strategy for how you plan to continue meeting your monthly loan obligations under modified terms.

Apply under the loan modification program if you are having difficulty paying your monthly mortgage due to financial hardship. Counseling is available free of charge to help you select and deal with a lender participating in the loan modification program.

Loan Modifications - Budget is Key

2009-09-07T12:22:00.000-07:00

Loan modifications are on top of every homeowner's to do list these days. And why not? Having your mortgage modified can lower your interest rates, promote late payment forgiveness, extend your mortgage over a longer and more manageable period, and possibly even lower the principle.

Naturally, something that can be this beneficial isn't east to get. Many lenders and financial institutions are holding onto their loan modifications with an iron grip. The only way to get one is to convince the lending company your mortgage is with that your current financial situation can't handle your current interest rate, but a lower one will be affordable.

You have a relatively small window through which to make your lender believe you can make your lower payments. Especially because the vast majority of homeowners just like yourself end up not being able to make their first payment, even with the best of intentions. You can beat the statistics by working out a budget prior to applying and requesting terms that you will truly be able to afford.

If you are doing the modification yourself, the hardship letter is the only way for your voice to be heard. Your application is generally checked by underwriting software, and the hardship letter is to possibly have your lender look at it again or give it more consideration. You want to include not only how you got into your financial hardship, but how you are going to handle your payments from here on out.

One of the benefits of using a modification company instead of doing it on your own is that your lender deals more with a professional you would hire than you yourself. Utilizing a company will get your voice not only heard through the letter, but also through the negotiations. Modification companies serve as mediators between you and your lender so you can get the best terms possible and convince them you are reliable.

But no matter what method you choose to approach your lender, they do listen. It's just about your ability to show what you're able to do in order to afford your mortgage payments. Loan modifications are difficult to get, but it's worth it in the long run.

If you are not sure how to approach your lender, there are FHA representatives who can give you all the advice you'll ever need on loan modifications. And if you choose to do so, they can also help you negotiate terms with your lender.

Include These 3 Essential Points in Your Loan Modification Hardship Letter

2009-09-07T12:20:00.000-07:00

Your lender is willing to assist you if you are experiencing difficulty making your monthly house payments. Through a loan modification program, they can work with you to modify the terms of your loan. The application process requires you to write a hardship letter that explains to the lender why you're in your financial situation and it is the key to your approval for loan modification. Make sure you include the three essential points required by the bank.

While writing a letter documenting your hardship, it's best to use a guideline to follow as you write the letter. This allows you to organize your thoughts and stay on track. You will be more likely to get approved for your loan modification if you address the three essential points outlined below.

1. Discuss what extenuating circumstances have occurred that have brought about your financial hardship. Explain in detail whether you suffered illness that incurred high medical bills, suffered an accident, were downsized or laid off from your job, or any other factors contributing to your current financial situation.

2. Detail when your financial crisis began. Be able to show the lender that your financial difficulties didn't begin until your circumstances unexpectedly changed due to hardship. If you've never been late on payments before now, tell them that.

3. Develop a plan for how you are going to cut back on expenses by creating a budget or selling off luxury items and include that information in your hardship letter to your lender. They will want to know that you are taking steps to improve your situation.

The hardship letter is the most compelling part of your application for loan modification because it "tells your story" to your lender to explain to them you are facing financial hardship.

Locating a Mortgage Loan Online For Those With Bad Credit

2009-09-07T12:14:00.001-07:00

These days, applying for a bad credit mortgage is easier than ever with the World Wide Web. Before the Internet, it took days of calling lenders individually for quotes. People were frazzled and exhausted by the time they were done. But today, online mortgage lenders automatically review Internet applications and you can get a quote in just hours after clicking 'enter.'

Reasons to Get Bad Credit Mortgages

Bad credit now doesn't have to ruin your life forever. People can turn things around by starting fresh with new credit and building up a history of responsible on time payments. If you are considering buying a house, then the first step is to start working on improving your credit score.

Getting a bad credit mortgage will aid in rebuilding your credit. Homes are a big investment, and if a person makes timely payments every month then their credit will increase dramatically. Better credit broadens the options available to you for future refinance or other loans.

Locating Poor Credit Mortgages with Small Rates

If you have bad credit and obtain a loan through traditional banks or mortgage lenders, you can bet you'll be socked with a high interest rate. Since mortgage rates are low, bad credit applicants can find similar low-rate mortgages. But it takes finding a good lender and a perfect loan product tailored for you.

The best way to find potential lenders is by Internet surfing a little. The typical lender will list details about their rates, services, and offers online. The lender's website might also add information about prepayment penalties, reward programs, and refinancing options.

Using the Internet to Apply for a Bad Credit Mortgage

Before you fill out an actual application, get a handful of quotes from various lenders. When providing you with a quote, lenders won't investigate your credit. They will simply use the information about your credit history that you give them, which is why it's a good idea to check out a free copy of your credit report before seeking quotes. Get a minimum of four quotes from different lenders.

You can either talk to each individual lender separately, or you can let a mortgage broker do the legwork for you. A broker will collect your information, locate useful loan packages, and get offers from lenders that might be good for you. A homebuyer can look at the information a broker sends them and pick the best one.

What Are Commercial Mortgage Loans?

2009-09-07T12:13:00.000-07:00

Commercial mortgage loans are designed for buying property for commercial (as opposed to residential) use. This includes establishing or expanding office space, property investments, and property development.

Residential Loans vs. Commercial Loans

Residential loans, or home loans, apply to any property of four units or less. If a property has more than four units it qualifies for a commercial loan. Commercial mortgage loans are available for different variable interest rates than most residential loans.

Interest Rates on Commercial Mortgages

Commercial loans carry substantially higher interest rates than home loans. Since many businesses fail, and if they don't make profits they are unable to pay back the loan, commercial loans are riskier from the lender's perspective. So in order to calculate the interest rate for a given commercial loan, the lender thoroughly evaluated your business proposal. If you own an established company and it has performed reliably well over the last handful of years, you should qualify for a commercial loan. The standard term of a commercial mortgage loan is 25 years with domestic property, but it can be as short as 10 years depending on the loan.

If you're in need of a business property or want to expand your business then you should look into commercial brokers such as I Loan Resource, which can help business owners find acceptable loans and get them the best possible package for their needs.

At I Loan Resource, only the best lending institutions across the country are included. These companies have undergone a rigorous pre-qualification process and are required to meet strict standards of customer satisfaction. They must thoroughly explain all aspects of the loan and all fees. I Loan Resource helps business and home owners to find just the right lender to provide applicable mortgages for properties, refinances, and equity loans.

If you're concerned about your credit history's impact on your loan, then fill out an online form with I Loan Resource. A specialty representative will get in tough with you and detail your options, even with bad credit.

Mortgage Market Update

2009-09-06T22:28:00.001-07:00

The August jobs report was released this morning.

Unemployment rose to 9.7 percent nationwide as employers shed another 216,000 jobs. The news may not be as bad as it first seems.

Despite ongoing job losses and a rising Unemployment Rate, the jobs report reinforces the notion that the recession may be ending soon, if it hasn't already.

This is because Wall Street tends to treat employment data as a lagging economic indicator.

Businesses are slow to hire new workers when the economy is improving
Businesses are slow to fire existing workers when the economy is worsening

Because of this pattern, the monthly jobs report rarely reflects the "right now" of the U.S. economy and Wall Street knows it. More often, the report reflects the economy as it existed several months ago and, based on data, the economy appears to have broken out of its funk in April or May.

Consider these 2 examples of employment as a lagging indicator:

Job losses peaked in January 2009 -- 4 months after the September 2008 Financial Crisis
Job losses peaked in October 2001, 1 month before the 2001 recession ended. Jobs finally turned positive in October 2002 -- 12 months into the subsequent recovery

In other words, jobs data doesn't so much tell us about today as it tells us about yesterday. It's why mortgage rate are improving this morning. Wall Street expected the jobs data to be a little bit stronger than what it was.

All the talk of rising home values and consumer confidence levels may have left investors too optimistic about jobs and consumer spending. Today, they're shifting expectations and spelling good news for home buyers and rate shoppers.

On a lightly-traded day because of the holiday weekend, mortgage rates are improving.

Can You Save Money With a Bi-Weekly Mortgage?

2009-09-06T22:02:00.000-07:00

A bi-weekly mortgage is often touted as a fairly painless way for a homeowner to pay off their mortgage faster and save tens of thousands of dollars in the process. But is it really such a good idea?

On the surface, it looks like a pretty good deal. Instead of making a monthly mortgage payment, you pay half as much every two weeks. But because there are 52 weeks in a year, there are two months each year where you make three payments instead of two, which is the equivalent of making 13 monthly payments a year.

That extra "monthly payment" each year allows you to pay down your mortgage faster, anyway from four to six years faster than a regular 30-year loan. You also save a bundle on interest, because you're reducing the loan principal more quickly. Depending on your loan terms, a bi-weekly mortgage could reduce your total interest payments by $50,000-$60,000 over the life of a $200,000 mortgage.

For people who get paid weekly or every two weeks, it can sound particularly appealing, since they can simply take out the same amount from every paycheck for their mortgage payment. What's not to like?

Expect to pay more fees

Well, for one thing, there's the fees. Lenders typically charge an up-front or per-payment fee for setting up a bi-weekly mortgage, and sometimes charge both. These can range from several hundred dollars for the up-front fee and $5-$10 for monthly transaction fees. Over 25 years, that can add up to $1,500-$3,000.

"But so what?" you may say, "That's still a lot less than $50,000 saved over the life of the mortgage, right?"

Well, right - except that you don't have to do it that way.

Most 30-year mortgages these days allow you to make additional payments toward the principal without penalty. Meaning that you can simply pay more in those months when you get an extra paycheck, regardless of whether you're paid weekly or every two weeks.

The do-it-yourself route

If you're paid every two weeks, there'll be two months a year when you get three paychecks; if you're paid monthly, there'll be four months a year when you get five paychecks. Just increase your usual monthly mortgage payment by one-half or one-fourth (depending on how often you're paid) and you'll get all the benefit of a bi-weekly mortgage without the additional fees. Be sure to note on your payment that the additional money is to go toward principal reduction, and not toward interest.

If you're going to do a bi-weekly mortgage, you also want to make sure you'll own the house long enough for the reduced principal and interest to compound enough to make it worthwhile. If you're not going to be there for five to seven years, you may be better off putting the extra money into other investments, like a Roth IRA, stocks or CDs.

Timing isn't everything

One popular misconception about bi-weekly mortgage is that the more frequent payments save on interest because you're paying down the principal at more frequent intervals. The idea is that by making a payment in the middle of the month, you're reducing your principal and thereby the amount of interest charged in the second half of the month, compared to making a single payment at month's end. The savings gradually compound over time and eventually add up to a significant sum.

The problem is, mortgages don't work that way. Even if you're paying your servicer every two weeks, the payments are only credited to your account once a month, so you're still paying interest on the full principal remaining after your last payment. Credit cards and certain other debts often do work this way because they're recalculated daily, and regularly making small payments over the course of a month can help reduce interest costs on those debts. But not mortgages.

Can provide discipline

The one thing a bi-weekly mortgage can do for a borrower is provide discipline in making those extra payments each year. If you get paid on a weekly or bi-weekly payment schedule and just can't trust yourself to make those additional payments in those months when you get an extra paycheck, then yes, a bi-weekly mortgage might work for you and be worth the extra cost. Otherwise, simply making larger payments when those extra checks arrive will accomplish the same thing at lower cost.