Loan

Top 10 Questions About Loan Modifications

The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need.  To help you understand how the process works and what you can expect, here are the Top 10 Questions and Answers:

1. What exactly is a loan modification? A loan modification is a permanent change in one or more terms of a borrower’s home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford
2. Can the lender include late charges in the Loan Modification? The federal plan mandates that the bank waive any administrative charges, late fees and penalties when offering a loan workout.
3. How will the new government programs help me get a loan modification?  The Federal government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients.  Now, the banks will have a monetary incentive to offer help to qualified borrowers.  In addition, homeowners who pay their new modified payments on time will be eligible up to $5000 credit to their loan balance.
4. How do I know if I will qualify for a loan modification? The number 1 criteria your lender is looking at is your ability to make the new modified payment now and in the future. You need to supply the lender with proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, you will be able to afford the new, lower payment.  You must also be able to demonstrate that you are facing a financial hardship-lower income or higher expenses for example.
5. Do I have to be currently delinquent on my payments to get a loan modification? President Obama has included a special incentive under the Home Affordable Modification Plan that will pay lenders an extra bonus for reaching out to homeowners not yet delinquent but at risk in the future.  The goal is to help borrowers before they fall into default.
6. What is an acceptable Hardship situation? Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.
7. Will a loan modification help me stop foreclosure? Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.
8. Can my missed payments be added back into my new loan modification? Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.
9. Can I do a loan modification myself or should I pay someone to represent me? That is entirely up to you and your comfort level with dealing with your lender.  The Treasury Department is strongly discouraging the payment of any fee to a third party to represent you in a loan workout. Regardless of what you decide, the first thing you should do is learn all you can about the process, your legal rights, and what it takes to get your application approved.  An informed homeowner is harder to take advantage of and will have a much greater chance of success.
10. So how do I get started to modify my loan? Before contacting your bank’s loss mitigation department or a loan mod company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions.

President Obama’s Home Affordable Modification Plan offers real hope for millions of homeowners who need a solution to stay in their home.  Not everyone will qualify however, and interested borrowers will have to complete loan modification application forms, provide proof of their income and meet certain eligibility requirements.  Most lenders are participating in this new government subsidized plan, and homeowners are encouraged to learn how they can qualify and apply for a loan workout and avoid foreclosure. 

You can get the help you need to apply and qualify for a loan modification by ordering and downloading the best selling handbook for homeowners, The Complete Loan Modification Guide. This is a low cost, easy to read home edition loan mod kit that will provide you with everything you need to prepare a professional and acceptable loan modification application. You are provided with all of the necessary forms and given detailed directions on how to complete them properly. The Complete Loan Modification Guide will take you step by step through calculating your debt ratio, completing the financial statements, writing your hardship letter and then putting it all together to submit to your lender. Learn how to apply and qualify for the Obama federal program too. Get started today on the path to secure home ownership, order and download The Complete Loan Modification Guide.

For more information about mortgage loan modification, please visit us at: http://www.myloanmodificationcenter.com

June 7, 2010

Need a $500 Dollar Loan Today? Try a Payday Loan

Sometimes life doesn’t play fair. Payday is about a week away and your car engine light goes on. You’re overheating. You take your car to the mechanic. He gives you the bad news. Pay $350 now or blow out your engine. You know you don’t have money available. Your credit is horrible and you don’t have a credit card. Where do you get the money?

Consider a payday loan. It could be the easiest and fastest solution is to getting the cash you need. A payday loan can be obtained quickly online. With a payday loan the upside is, there are usually no credit checks and very little hassle. Plus with a payday loan, you can get the money wired directly into your bank account the same day you apply.

The downside of a payday loan? The interest rate on a payday loan which really is a fee – is kind of high. But again, it’s a fee for the convenience of a no-credit check payday loan which is usually about $30 per $100 borrowed. Just make sure you cover your payday loan in full on your next payday.

You can defer the payday loan principal and keep paying the fee until you have the money to pay off your payday loan in full. (warning: this can go on for up to 9 pay periods!). That means you’ll be paying a lot of interest on that payday loan.

Face it – credit cards are worse than a payday loan. You can pay the interest on a purchase for 10 years or more before you ever touch the principal – which makes a payday loan a better option! Think about it, your credit card charges you a cash advance fee of 3% – that’s $15 on a $500 loan. Then your APR on cash advance is about 29.99%. That’s $149.95 for a year – same as a payday loan at term. But unlike a payday loan you can add other “charges” to your principal like clothes, food, etc., and you may never payoff the cash advance portion.

When you make payments to the credit card, they have the option of NOT putting any of that payment to the cash advance portion. What this means is the higher interest payment gets paid off LAST – which, unlike a payday loan, can keep you paying interest on that same purchase for years. Again, not so with a payday loan.

With a payday loan you have to pay if off. It doesn’t go on and on forever like a credit card [which used to be called rotating credit line]. A payday loan is a fixed term loan.

So if you have a very short-term need for money. You may want to consider a payday loan. Just remember to use your payday loan wisely and never become a payday loan addict.

Dave Budke worked in the finance industry and has dedicated his time to telling the truth about credit and debt. He suggests always steering clear of easy credit unless it’s a true emergency. To find a good payday lender click here

June 7, 2010

Loan Modification Hardship Letter Template and 5 Insider Tips

A Loan Modification Hardship Letter is the most important first step in communicating with your employer. A well written hardship letter can make the difference between success and failure in your loan modification application

The letter is the chance to show your lender the circumstances that were out of your control that have forced you into a financially impossible situation.

It is important to remember that lenders get many applications and it is therefore important to be clear, concise and slightly unique in your writing.

5 Insider Tips

1. Describe the hardship without making excuses

2. Clearly state the steps you have taken to alleviate the hardship

3. Be short and concise

4. Emphasize your willingness to work together to resolve the situation

5. Describe the plan you have to get back on track

What Hardships do lenders accept?

a. Job Loss

b. Death to family member / mortgage payer

c. Divorce

d. Job Relocation

e. Increased monthly payments due to reset adjustable rate

Hardship Letter Template

Name of Bank/company

Address

Date

Loan Number:

Mr. & Mrs. ___________________

Signature_____________________

Loan # ______________________

Address______________________

Phone________________________

To learn more about the home mortgage loan modification process and receive additional loan modification templates tailored to homeowners unique situations, please visit Loan Modification Hardship Letter Templates

June 6, 2010