If you’re looking to alter your mortgage payment or you need some form of a loan modification, you’re probably wondering what it is, how it can help, and what this means for your credit and your finances moving forward. One of the common questions I get is will a loan modification lower your payments?
A loan modification is a modification or a change to the original terms of your mortgage. If you’ve had a financial hardship or if you have a high risk of losing your home based on medical bills, job loss, or financial change, your lender may allow you to modify your existing mortgage. The goal is to reduce the monthly payment for a time or permanently in order to keep you in the home until things get better.
There are several different directions for loan modifications.
Principal reduction – This is where your lender will eliminate a portion of the debt allowing you to repay less than you originally borrowed. Your lender will recalculate monthly payments based on a decreased balance. Most lenders are very reluctant to do this so you’re likely to have them alter other features of the loan instead of lowering your principal amount.
Lower interest rate – Your lender may reduce your current interest rate. This can also reduce your monthly mortgage payments and save you money over time. Sometimes these rates are temporary or they can be negotiated to be permanent for the life of the loan or Intel the borrower refinances or sells the property.
Extended terms – This is where your lender will extend how many years you have to pay the loan back. This will lower your monthly interest rate but it will be more costly over time since you be paying more in interest. This option is also referred to as a re-amortization.
Fixed-rate – Your lender may switch you from an adjustable-rate mortgage to a fixed-rate loan in order to keep you in the home and keep the monthly payments the same rather than going up or down based on the interest rates.
Postpone payments – Your lender may allow you to skip a few payments, which is a good temporary solution if you have a job change, job loss, or you have medical expenses that need to be paid first.
What happens if your lender refuses to talk to you about a loan modification? Contact our office today. We handle a lot of different cases with mortgage modification and loan modifications to keep you in your home and keep your payments low.
Advantage Legal Group is in the business of helping people that are in financial distress either modify their existing mortgage, refinance or find a way to mediate between the lender and the homeowner. We get asked quite often if homeowners can refinance after a mortgage modification.
A mortgage modification is typically handled between a housing counselor or a qualified attorney and the homeowner and lender. The homeowner cannot go to the lender directly and ask for this mediation but must do so with a housing counselor or lawyer. This is where Advantage Legal Group comes into play. We talk to the lenders for you and make them come to the table to discuss options to either lower your mortgage payment permanently or for a short amount of time. We can modify your existing term, save you thousands and get you caught up on any past mortgage payments.
Often times we get asked if people can refinance after they’ve already had a mortgage modification. Refinancing may not have been an option initially but now that they have dealt with the modification for several months they may want to refinance. Some homeowners that have gone through the Home Affordable Modification Program may now want to refinance to a permanent lower rates. With rates continuing to creep up this is not a bad idea.
In order to qualify for refinance after modification you must have made at least 24 monthly mortgage payments consistently since the modification was completed, not since you’ve applied. If there was an additional second mortgage in place that waiting time qualifies. If you’re purchasing or refinancing at different property that did not undergo the modification you only need to wait one year.
All of these qualifications still apply whether you’re refinancing or buying a new home. You can’t modify a mortgage and then sell that home in the next two months. You must make consistent payments for at least 12 or 24 months depending on your situation before your allowed to refinance or apply for a new loan. Of course you can sell the property but you cannot apply for a new loan after that particular waiting period.
Feel free to view our video below on mortgage mediation and how Advantage Legal Group has helped hundreds of Seattle area residents keep their homes and lower their mortgage payments by refinancing or mortgage mediation.
Refinancing, buying a new home or mortgage modification definitely is something to be discussed with a lender or qualified housing counselor or attorney. For more information contact Advantage Legal Group and thank you to our guests blogger this month Tina Droessler. Tina is an expert real estate professional in Palm Desert and helps dozens of homebuyers and homeowners each year find or keep the home of their dreams.
Advantage Legal Group is that helping people for four years with the Washington State Foreclosure Fairness Act. It is helped many homeowners stay in their home and avoid foreclosure by forcing these banks to have face-to-face communication with the homeowners. These meetings are mediated and overseen by someone that is qualified with the Washington state Foreclosure Fairness act to make sure that the banks are doing what they should be doing in order to to help homeowners. This helps them modify their existing mortgage into a payment they can actually afford.
Homeowners need an attorney or housing counselor to actually ask for the meeting, which is something a lot of homeowners don’t realize. Many people feel that they can simply call up the lenders and ask for this meeting directly but that’s not the case. The meeting will happen in the county in which the homeowner resides. The housing counselor or your attorney will set up the meeting in a unbiased and neutral location. If you’re being called into the lender’s attorney’s office or the lender is setting up this meeting, this may not be the mediation meeting that you want.
Advantage Legal Group has completed many of these mediations by helping homeowners lower their monthly mortgage payments and keep them in their homes. Lenders such as Nationstar met with the attorneys at Advantage Legal Group and moved to their old payment of $3907 with an interest of 2.75% to a new interest of 2% lowering their payment to $2564. This was a savings of over $1342 every month.
We Are Mortgage Modification Lawyer in Bellevue and Seattle
Advantage Legal Group states that one of the lenders that is difficult to deal with is Wells Fargo however, they were able to moderate and mediate a mortgage payment of $1609 down to $1411 with a reduction of nearly $200 and interest reduction from 3.5% to 2.75%. The couple in this scenario was actually 19 months behind in their mortgage payment so it really doesn’t matter how far behind you are, Advantage Legal Group can get the job done.
Another scenario showed an adjustable-rate mortgage of 9.1% and a payment of over $3100 down to a fixed interest rate of just 2% with a new payment of $1732. These are the type of stories that really makes sense to struggling homeowners that may risk foreclosure if they don’t do what they need to do in contact a lawyer or housing counselor immediately.
Mortgage Modification Lawyer in Bellevue and Seattle
Jonathan Smith of Advantage does more people that you don’t want to wait too long. The longer you wait the higher the interest rate you might end up getting. Jonathan mentions that people can have a free consultation to figure out if this Washington State Foreclosure Fairness Act actually will work for their situation so don’t wait; give them a call today and find out if this mortgage modification can work for you. 425-452-9797
Will a Mortgage Modification Work for Me?
To hear the term, “mortgage modification” incites both hope and fear. Why because it is a way to save your home, but very few achieve it. Even housing counselors admit that there’s seemingly something mysterious that dictates who actually qualify for a mortgage modification but there ARE ways homeowners can better their chances.
Tips for getting a mortgage loan modification:
1) First, homeowners need to gather together and submit paycheck stubs, a hardship letter, a budget and any other documents that the loan servicer is going to want. You don’t want to miss ANYTHING because if you do, your loan file gets tossed aside to deal with a package that IS complete.
2) Next, you want to ask questions. Be certain you know exactly what to provide to servicers. Servicers often ask for two paycheck stubs assuming that two paychecks represent one month’s income. But a homeowner who is paid weekly, bimonthly or monthly may have to submit more or fewer paycheck documents. See the misunderstanding here? Similar misunderstandings on other documents can cause big problems.
3) Additionally, you should keep contact/communication current. Homeowners should call the servicer at least weekly to check on their request. Ask if your package is complete and review the documents. Explain any and all special or changed circumstances. Counselors do help but lenders also want to hear from the homeowner often.
4) Lastly, be persistent. Of course, you’ll feel frustrated and annoyed when asked to resubmit documents. However, if you simply realize you’re at their beck and call and hang in there, you just may be rewarded in the end!
Some more tips:
Through all the above tips, remember to be FLEXIBLE…loan modifications come in many varieties. Consider taking what you can get.
Also, release your tax return. Homeowners are required to not only submit income documents but also sign IRS Form 4506-T, which allows the servicer to access the homeowner’s federal tax returns. People often don’t succeed because their unable to provide good proof of income.
Contact Advantage Legal Group to get started on mortgage modification in Seattle.
If you’re trying to do a mortgage modification on a home that is not your primary residence, your best bet is to go through the mortgage modification program, as opposed to the mortgage mediation program. The mortgage modification program generally aims for payment of about 31% of your gross income and is done usually under the HAMP program. Although, there are standard modifications available through your lender, which could go up as high as 42% of your gross income.
Hi, my name is Jonathan Smith and I am an attorney servicing Western Washington. My law firm does mortgage mediation, mortgage modifications, bankruptcies and short sales.
Right now with the current pandemic, homeowners may be fearful of losing their homes due to foreclosure. If you’ve been out of work and unable to either get employment or just not enough to make your mortgage payment, foreclosure may be on the horizon. It’s extremely important to act now and as quickly as possible to avoid foreclosure.
Foreclosure defense is the legal strategy initiated by a homeowner to avoid foreclosure. The simplest way is to simply modify the mortgage but the homeowner may not be able to do this alone with their lender. They may need a foreclosure defense attorney to renegotiate the terms of the mortgage in order to make the payments more affordable or put off the payments for a couple of months.
In several cases, homeowners can successfully contest foreclosure proceedings with the help of a foreclosure defense attorney. We help homeowners find legal grounds on which the proceedings can be challenged. In rare cases, mortgage companies have filed foreclosure proceedings illegally.
We are offering foreclosure defense services, which use all of the above to attempt to avoid foreclosure, if at all possible. The single worst impact on your credit is a foreclosure. It’s far better to have either a short sale or some other disposition of the property, or a mortgage modification or a mediation – than it is to have a foreclosure.
We are offering services to help you work out the best methodology for dealing with your current situation. If that’s something that interests you, check out my website at AdvantageLegalGroup.com Again, AdvantageLegalGroup.com. And I look forward to meeting you.