Lindsy Emery asked:




When you’re in financial distress and you own a home, it can be a scary time. Will you lose it all? Will your home get repossessed by the bank? At a time like this, you may sit down to review your options but get bogged down in the choices you have. How is home loan modification different than mortgage refinancing? Which is right for you?

First off, relax. There are lots of qualified financial counselors, information from your bank, and free online resources like this website to help you get informed. Nobody expects you to know everything right away, and it’s not really as complicated as you might think.

Home Loan Modification vs. Mortgage Refinancing, Are They The Same Thing?

While they are not the same thing, modification and refinancing are both methods for reshuffling your mortgage payments and handling them in a new way. Homeowners turn to each of them, but usually in different times and under different circumstances.

Most homeowners are more familiar with loan refinancing. In a refinance, you take out a new mortgage loan (with more favorable terms) and use it to pay off your old one. People generally refinance when they’ve built up some equity in their homes and they want to take advantage of better terms, like a lower interest rate.

When you get a modification, you’re not taking out a new loan. A modification adjusts the terms of your original mortgage in a variety of ways. The most common loan mods include:

1. extending the loan term

2. decreasing the interest rate

3. forgiving principal (in rare cases)

The goal is to end up with a lower monthly payment that you can afford. Your bank sees regular monthly payments coming in again, and you get to keep your house.

Is Refinancing or Modification Right for You?

A number of factors determine whether you should refinance or apply for a modification, and your professional financial counselor is best equipped to help you decide which is right for you.

If you have substantial equity in your home and it hasn’t depreciated more than 10% since you first bought it, you may be a good candidate for refinancing. Lenders usually require an upfront payment of “points,” where each point equals 1% of the loan and the more points, the lower the new interest rate. 20% equity is usually a good number for refinancing.

Unfortunately, many lenders won’t let you refinance if your home isn’t worth at least 90% of your current loan’s vale. Plummeting house prices have caused many people to go underwater on their mortgages, making refinancing unrealistic for many homeowners.

If you’ve had some catastrophic event in your family (such as an unemployment, death, divorce, or medical disaster) that has made it impossible to meet your monthly mortgage payment, you might be a good candidate for loan modification. If your monthly payment (including principal, interest, taxes, and insurance) totals more than 35% to 45% of your gross monthly income, you could also be a good candidate for loan modification. 

Carrie

Tim Gorman asked:




Equity borrowings call for very good credit scores, however, your bad credit rates may fetch you fast home equity loans at higher rates. Condition of your house, and your income level are the other points to be concerned about. When it comes to home equity loans, there are lots of places you can look. Some people prefer to go to a brick and mortar lender in their area. Internet search is a great method to start your search for easy home loans, and home equity loans.

Get help for home loans by finding sources online. You can have your needs served on the internet and get free quotes for home equity loan comparison. By enlisting the help and guidance of some online companies, you can be connected with the most experienced and qualified mortgage brokers.

Applying for a home equity loan is much easier than the process you underwent in applying for your original mortgage. To qualify for a fast home equity loan, your credit must be in good standing and you must be able to document your income. Loan process time-frame is between 10 and 24 days. For all business loans, the borrower(s) must have a minimum credit score of 660 and at least a 65 paydex score to qualify. To get started with the payday loan process, you just need to fill out an online application form with a few basic details about yourself, your bank account and your job. You can have cash transferred to your bank account within minutes.

The advantage of getting home equity loans on the Internet is that you have licensed online mortgage brokers who will give you the prime rate regardless of what state you live in. Maybe a different person who banks at the same bank but a different state can get a lower rate. And it is often possible to get home equity loans on the Internet. Because of the electronic and connected nature of the Internet, your information can be entered, reviewed, and approved much faster than it would take for humans to review the information and make a decision. Fast home equity loans can be obtained through various lending companies that specialize in providing these loans. They can be contacted online or over the phone through the information provided by these companies in various advertisements.

It is important, however, to factor in closing costs in the decision making process. The closing costs may eat up a great deal of the savings, if not all of it. It takes less than two minutes to complete an application, and your information is processed right away. The lender does a comparative search across all financial institutions offering home improvement loans in your area, and usually you will be called back the next business day.

Marion

drowning in debt asked:


I had to sell my home on short sale after it being on the market for a year and a half and I simply couldn’t afford it any longer. I had the original mortgage and two home equity loans. The first mortgage was paid off and the two home equity loans removed the lien but still wanted me to pay all the money I owed them. I now rent and am unable to keep up all the payments. The home equity loans are now threatening to sue me. They want a big lump sum and there is no way I can come up with it and they say it is too late to make regular payments. What can I do? What can I expect if they take me to court? How reliable are debt relief company’s. I would really appreciate any advice anyone can give.

Sam