Case Study #5
House Value: $350,000
Total Mortgage Balance: $403,000
Payment Status: 11 months behind
Current Total Mortgage Payment: $3,931 interest-only, including taxes and insurance
Loan Type: 2 year fixed at 10.875%
Hardship: The client purchased the home as an investment property, with no money down. Her goal was to refinance the loan in a few years, when some equity had been established in the house. When the house value dropped below the mortgage amount, she was unable to refinance and the interest rate her loan adjusted to over 10%. Her renters missed two months of rent payments, which caused her to start falling behind on the mortgage payments. She had no savings account to fall back on.
Lender's Proposal: 2 year ARM at 3.875%
New Payment: $1,550 P.I.T.I.*
Total Monthly Savings: $2,451
Time from submission to acceptance: 26 days
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Who doesn't Qualify?
While there is no list of what causes a dis-qualification, it's safe to say that if you are current on your mortgage, have money in the bank, have enough income to cover all your bills, and have a reasonable rate and terms on your loan, it's unlikely you will convince the lender to modify your loan.
However, you may qualify for a short sale if you are interested in selling but you don't have the cash to make up the difference between what you owe and what you can sell for.
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