Case Study #7
House Value: $370,000
Total Mortgage Balance: $451,000
Payment Status: Current
Current Total Mortgage Payment: $2,900 interest-only
Loan Type: 2 year ARM at 8.875%
Hardship: The client purchased the property as a home for his growing family. He owns a small mortgage company, and saw a dramatic drop in income over the past two years. His business is still operating, but at a much lower profit.
Lenders' Proposal: 2 year ARM at 5.00% for the first mortgage, and 2 year ARM at 3.00% for the second mortgage. The first mortgage lender opened a new escrow account for the client, paid his 2008 property taxes, and added the cost to the loan balance.
New Payment: $2,485 P.I.T.I.*
Total Monthly Savings: $773
Time from submission to acceptance: 19 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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