The goal of loan modification is to decrease the homeowner’s loan payment and make the settlement more cost effective. This can be accomplished by utilizing one or more of the following: Reduce the rate of interest; prolong the term of loan; add the unpaid interest to the principal balance; and lessen the principal balance. On the other hand, in most cases loan modifications may also result in a bigger payment. This could sound unusual to the client because this is contrary to the way a loan modification is intended to function. Not all banks may provide a loan modification that lessens a homeowner’s mortgage payment. Several banks may offer a loan modification that raises the settlement. The basis for this is, banks use ratio which often cap out at 38 percent of gross monthly revenue in identifying the new mortgage payment. If the financial statement warrants, the bank may ask for increased settlement.
Bear in mind that some banks may provide a provisional loan modification. This means that the financial institution will not consent to come up with a permanent loan modification but may otherwise offer the following situations: The principal balance continues to be same; property owners will be required to create a new lowered payment; the period of the new settlement is defined for 3 to 6 months; the result that the property owner earns the new settlement promptly with the temporary loan modification term limit, may compel the bank to allow a permanent loan modification.
You have to know that banks do not process short sales simultaneously with a loan modification. Most of the banks will not open two files simultaneously. You should decide in advance whether you would like to pursue a loan modification or short sale. You need to pursue one or the other. A bank will close out a possible short sale operation if the homeowner will decide afterwards that they want to try for a loan modification. The time to process a short sale is about the same thing when you have a loan modification. Some loan modification requires 3 to 6 months to finish.
It will be unfair to a client who has expected in good faith to offer a short sale and agreed to wait for short sale affirmation only to learn that the sellers have second thoughts and now desired to accomplish a loan modification in the midst of the short sale. It is suggested to make your decision and stick with it. It will be easier to generate a request for your own loan modification and not to work with any organization that you still have to pay. You can even avoid loan modification business scammers.
Property owners who would choose to get out from financial obligation may prefer to do a short sale rather than a loan modification. A short sale means that the bank will accept a lower payoff and release the loan. If your home is less than the amount payable, it’ll make more sense to execute a short sale to be relieved of the credit burden. One component that short sale is favored is that, right after 2 to 3 years of maintaining credit and costs remain the same, homeowners may qualify to buy an additional home with a mortgage but a more affordable payment.
Know The MRA Group because of it provides its clients the capacity to make strategic real estate decisions determined by sound financial principles. Mortgage Relief Advocates has got the experience and expertise to follow through on those decisions to attain pre-determined goals.