Want To Refinance But Owe More Than Your House Is Worth? Behind On Your Mortgage Payments? Facing Foreclosure?

by Tammy

Generally speaking, if you are currently behind on your mortgage payments and currently owe more than  your house is worth, there are very few options.  You may find some relief from the FHA Secure program, but in reality, very few people are actually qualifying for this program.

You may be able to refinance if you are currently in an FHA loan -- you could do a FHA Streamline without an appraisal, but very few people are actually in FHA loans because they didn't become popular until recently.

So it is somewhat safe to say that if you are currently behind on your mortgage payments and currently owe more than your house is worth, there are very few options.

Combine that with today's article in the Arizona Republic that says Adjustable Rate Mortgage resets will peak in July and it paints a particularly grim picture.  Many people are currently in trouble.  Many more people will be in trouble soon.

What is going to happen?

Well, I can't say that it is going to be pretty... unemployment is rising, home values are falling (or at best, flat) and more and more people are facing serious problems with their mortgage.

Enter the concept of "Loan Modification". 

The idea of "loan modification" is not new -- it has been going on for years... IN SMALL NUMBERS. 

When a loan if "modified", the lender may do any number of things to make the mortgage more affordable for homeowners.  They may reduce the principal amount, reduce the interest rate, extend the term of the initial rate, or any number of other things.  Each situation is different and each lender handles loan modification differently.

The key to loan modification is communication with your current lender.  If you are having trouble making your mortgage payment, there has never been a better time to pick up the phone and talk to your lender than right now.

If your lender is non-responsive or you don't feel like it is worth doing, it may be helpful to get in touch with a legal firm who can represent you with your lender. 

This week, I met with a handful of companies who are having amazing success at helping homeowners get modifications to their loan terms so that they can stay in their homes and avoid all of the problems that foreclosure brings.

If you think that you are a candidate for a loan modification because you want to refinance but are currently behind on your payments and owe more than your house is worth, let me know -- I will be happy to put you in touch with the best in the business who can help you.

Comments

[fix your credit]

Hi,
I heard on a loan modification you can delete the second mortgage if you have a firts and a second. Is the true?

[Justin McHood]

@Fix Your Credit:

Right now the loan modification rules are different from lender to lender. I can't say exactly if you "can delete the second mortgage if you have a first and a second" because the answer will vary by lender.

So make sure to check with your lender on what is possible.

I would expect that if your first and second mortgage are with the same lender, you will probably stand a better chance of "deleting the first" than if they were with two different lenders.

--Justin