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Why So Many Loan Modifications Fail and How to Seek Help
For millions of homeowners struggling to pay their mortgage, many are faced with falling home values which makes it hard to either sell or refinance. Therefore, many homeowners make the painful decision to simply walk away rather than fighting to stay afloat and keep their home. Financially speaking, it does make a lot of sense for many underwater homeowners to walk away or short sell because for some, it may take them many years to break even and start to have positive equity. However, not everyone falls in this category. The reasons are many, such as: (1) if you are planning to hold on to your house for a long time, you could break even and then start to have positive equity again; (2) perhaps you have personal goals to hold on to your house because you enjoy having your family living in it. So just because lots of people are walking away does not make it the right answer for everyone. This would be similar to doing what everyone else was doing during the bubble, which was to buy a house because everyone was.
In an effort to help some of these homeowners who wanted to save their home, loan modification programs have become one of the primary rescue effort. Loan modifications help make the mortgage payment more affordable so that people can keep their homes.
Unfortunately, these programs can be very challenging and at times fail to help the homeowners because the process to qualify for one and get approved for one is super complicated.
On one hand, banks make the process very difficult. In fact, some research shows that it was much easier for most people to obtain mortgages when they purchased their homes than it is now to apply for loan modifications. Many believe that banks do not have the proper infrastructure in place to deal with so many loan modification applications. Other believe that the banks are giving people the run-around on purpose.
On the other hand, they are lots of people who apply for loan modifications the wrong way not adequately knowing what they are getting into, or what will be expected of them. They submit their applications and wait for months hoping for the positive answer. Well, for most people, and this is a sad but true fact, if they are not financially pre-qualified they won’t get a positive response. What homeowners need to do is not only demonstrate to investors and lenders that modifying their current loan is more cost-effective than foreclosure, but that they are able to make the new modified payment.
So instead of applying unprepared, it would be better to know ahead of time whether you could qualify for a loan modification. This is vital to know because if you don’t qualify for the new terms, then the modification could be denied, anyway. And if you are not pre-qualified, perhaps fine-tuning your budget, i.e. lowering your debt, taking the train instead of owning the car, could help you get qualified. The decision whether to apply is 100% up to you, but having guidance can save you time and money, and increases your chances of approval for a loan modification. So here are some of the pre-qualification criteria that are considered crucial and this is where you need guidance with:
1. Your front-end debt-to-income ratio must be above 31% of your gross income prior to the modification.
2. Your house target payment, also known as PITIA (principal, interest, taxes, insurance, and association dues), has to be lowered to be at 31%-38% of your gross income after the modification in order to meet the HAMP guidelines. This is done in three steps. (1) Your house payment target is achieved by lowering your interest rate to no more than 2% with a 30 year loan term. (2) If the target is not reached, then your loan term is extended up to 40 years in order to try and reach the new house target payment. (3) The third step is to either provide you with a loan forbearance or a balance reduction if the target payment is not reached in steps 1 and 2. And this is the tricky part. There are relatively few loan modifications that have received a balance reduction. Additionally, as far as the forbearance option goes, this is very relative to your case; there is no size fit all, basically, the loan modification program guidelines do not give one percentage forbearance ratio for everyone.
So now you are wondering if you should become a mathematician in order to figure all the ratios and calculations involved in a loan modification. You sort of do if you are going to figure it out on your own. The alternative option is to seek out help where you can get unbiased, conflict-free analysis for your loan modification potential.
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Online Insurance and loans
Insurance has become a common word in every household and company. This is because it has become essential to have insurance to protect ourselves from the financial loses or from the difficult situations. Insurance is a policy signed by the two persons, an insurer and the insured, that the insurer will provide a fixed or agreed amount of money at the time of necessity and the insured will pay a fixed sum of money to the insurer for a period of time. This money acts as a safety deposit for the future. Since we never know what can happen in future, it is very essential to take all protection measures.
The most common or the famous type of the insurance policy is the life insurance. In life insurance, an assured sum of money is given by the insurance company to the insured person when the unfortunate event like death or accident or any other event which is being covered in the policy happens. In case of death, the insured money is given to the family members. This type of insurance helps in providing security to the family. After getting life insurance, one can feel the peace of mind that there will be someone who will take care of the financial needs of your family when you will be no more.
Similarly there are insurances on health. In todays time, when majority of the people are suffering from one or the other disease, the health insurance policies have become important. The health insurance policies generally take care of your medical bills when you fall ill. Apart from these types of the insurances; the government has made it mandatory to have the vehicle insurance for the drivers. This is because in the case of accidents, there has to be somebody who can take care of your medical as well as your repair bills of the vehicle. There are numerous of companies that provide various types of the insurance policies at attractive rates of premium.
Another type of financial help that you can avail is loans. People in earlier times used to borrow money to fulfill their needs and to accomplish their dreams. This borrowing of money form a lender is now termed as loan. Today, the banks play the most important role in helping people financially so that they can live a better life. The banks play the role of the lender. A loan is a sum of money given by the bank to the borrower under the condition that the borrower will repay in back in fixed amount of time with some rate of interest on it. This rate of interest is decided by several factors. There are different types of loans that you can avail for different reasons like for paying education fees, for starting a new business, for buying a car or home or any other valuable. There are both short term and the long term loans depending on the needs of the customers.