How Long Does It Take To Re-Negotiate A Mortgage?

1.8 million homes were foreclosed in 2008. Millions of homeowners are expected to enter into foreclosure in 2009 and 2010. Rather than face foreclosure and suffer an eviction from your home, is there anything you can do to prevent the situation from escalating?

Indeed, there is! You can ask to change the terms of your mortgage. Mortgage lenders are not in the business of repossessing and re-selling homes. The cost of foreclosure with attorney’s fees and lost income is just too much for a lender’s bottom line. It is in the lender’s best interest to change the mortgage terms so that they continue to earn interest from your home purchase.

Step One: Open Communications with Your Lender

The first step is to call your loan servicer and discuss your current financial situation. If you have experienced a drop in income, or other bills have piled on so that your current mortgage payment is not sustainable, let them know that you would like to discuss a loan modification.

Typically, a lender will require you to go through another underwriting process where they will evaluate your situation. They will ask for your income verification and IRS tax filings. The lender will pull a credit history report, as well as require a home appraisal usually at your cost. If you want to ask for a loan modification, be sure to have all possible paperwork and documentation at the ready. Even after submitting copies of your paperwork, it is likely that the underwriter will ask for additional documentation. The faster you can respond to these requests, the quicker he will be able to make a decision.

Step Two: What Factors the Lender Considers

The loan modification underwriter must determine whether changing your loan terms will still meet the lender’s investment objectives and parameters. They will check to see if your debt to income ratio has changed, and if so, whether a new, lower interest rate will help lower a mortgage payment to one more affordable to you. Sometime a lower interest rate does not fit with their loan parameters. However, even if the new loan terms are not within the typical parameters of their loan objectives, remember that a possible alternative is foreclosure. Mortgage companies will take that into special consideration if they want to avoid foreclosing.

Step Three: The Payment Reduction Scenarios

If you are granted a loan modification to lower monthly payments, it may occur through several possibilities. The best situation (but worst for the lender) is that they could lower your interest rate. This would help lower your monthly payments by hundreds of dollars.

If you have paid a considerable amount down from your principal balance, they may just extend the current term and re-amortize. For instance, if you had a $200,000, 30-yr mortgage with an interest rate of 7%, your monthly payment is $1331. If your balance was down to $175,000, you could extend your mortgage to another 30 years and lower your payment to $1164. That’s a savings of $167 per month, and it could be even lower if the interest rate is reduced as well.

Another possibility is that the mortgage company may extend forbearance on your mortgage payment for a limited time. With forbearance, you are not required to make monthly payments for a period of time; however, interest will still accrue and be added onto the principal balance. Though you could end up paying more for this type of modification in the end, it could certainly save you from entering foreclosure in a time of financial crisis.

How Long the Process Takes

If your lender is willing to listen and re-negotiate your mortgage, and you have the required paperwork ready, you could have a decision within a matter of weeks. If there are delays due to needed documentation, or required fixes found from a home appraisal and inspection, you may have to wait a month or two until everything has been approved to the lender’s satisfaction. The best strategy is to be flexible and agree to meet the demands of the lender.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

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Article sourced from:
http://www.articlecity.com/articles/business_and_finance/article_9882.shtml

Mortgage Basics in the Current Australian Market

Homeownership in Australia is at an all-time high. The Mortgage Industry Association of Australia reports that Australia's homeownership rate of 70 percent is among the highest in the world. It's clear that more Australians are buying homes, in part due to the nation's economic strength and prosperity, as well as the affordable housing market. According to the Australian Bureau of Statistics, the average value of a recently purchased home was $200,000 for first-time homebuyers, and $280,000 for changeover buyers. And if you're a first-time home-buyer, you may be eligible for a non-means-tested, First Home Owner Grant.

Several other resources are available, including the Defence HomeOwner Scheme, which offers interest subsidies for members and ex-members of the Australian Defence Force wishing to purchase their own home. There are several steps involved in getting a mortgage, and it starts before you even have your new home picked out. Selecting a mortgage lender is the earliest, and perhaps the most important step of all. It will ultimately determine both the price range you will be focusing on, the features of a home you will be looking for as well as the all-important location factor. By doing extra research in the preliminary stage, you are more likely to find a home in your desired location (especially in cities with competitive real-estate markets like Sydney) because having a definite price in mind will focus your house-hunting efforts.

Choosing a lender that will work with you, and provide you with the best rates and fees possible will help you determine how much you can afford to spend on your new home. Often, this step is best done with the help of online research tools and leading independent mortgage resources.

Once you have selected a lender, they will work with you to pre-qualify you for a loan, and determine how much you can afford to spend. The pre-qualification is not the same thing as approval, but rather, a guideline that gives you a dollar amount that you should qualify for given the information you provided. Only after these two steps is it time to go out and start house-hunting.

When you have found the home of your dreams, your lender or broker will be able to give you advice on the next steps. After making your offer, the process of actually obtaining your loan should be straightforward and speedy, especially if you have already been pre-qualified. By doing some extra research in the preliminary stage of property searching and by taking advantage of current developments in today’s booming market (such as the First Home Owner Grant), you can move into your home sooner, with less hassle and with a better mortgage.
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Article sourced from: http://www.articlecity.com/articles/business_and_finance/article_6764.shtml