Case Study #8
House Value: $298,000
Total Mortgage Balance: $286,000
Payment Status: 2 months behind
Current Total Mortgage Payment: $2,890 P.I.T.I.*
Loan Type: 40 year Fixed at 10.00%
Hardship: The clients purchased the house in 2006 under the impression that the housing market would continue improving, and they could sell the house at a profit if they could no longer afford the payments. As the economy declined, the clients saw a decrease in work hours. No longer able to sell their house at a profit, our clients were forced to rent out the house and stay with their relatives.
Lender's Proposal: Interest-only payments starting at 3.625%, adjusted annually up to a maximum of 8.00% for the next 10 years. The lenders also agreed to forgive the past due amount.
New Payment: $889 interest-only
Total Monthly Savings: $2,001
Time from submission to acceptance: 35 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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