by John Roney
As we all know, there are no more stated income, or any sub prime loans since the market has crashed. Now lenders are focusing only on full documentation loans. As a result, it is becoming more and more impossible for homeowners to refinance their mortgages because they are either upside down or they won?t qualify because they have no income. Now homeowners can only either talk to their mortgage relief fund company to do a mortgage loan modification or give up and let the house go to foreclosure.
Since banks are in the business of making money, they are commonly interested in receiving payments; therefore, they are more likely to modifying the loan. In addition to that if you have tried to call the bank, I?m sure that you have experienced them transferring you all over the place before finally hang up the phone. The good thing about a loan modification is that you don?t have to try to do anything that will ruin your credit like try to refinance.
In this scenario the intro rate would be set at 4.000% for the first three years of the loan. On the 37th month, the loan would adjust by adding the loan?s margin (2.250%) to the current index rate (say 1.250%). The result would be the ?fully indexed rate? of 3.500%. In this scenario a person would actually see their rate decrease on the initial adjustment. Depending upon the current index rate, the loan may be limited in its first adjustment by the 3% cap limit.
Should One Consider an Adjustable Rate Loan? ARMs do carry a higher degree of risk and it is essentially up to consumers to determine whether the rewards outweigh the potential risks. The first step is to examine how much lower current ARM rates are than fixed rates and determine how much savings there may be in the introductory rate period. Unless the ARM rates and savings are extremely attractive, the consumer may want to play it safe with a fixed rate mortgage program.
Another important reason not to miss payments is that your credit will be tarnished for years to come. Some home owners may believe that missing a few payments at the expense of their credit score, is not such a bad thing if they can get a lower mortgage payment. Here are some of the consequences that most home owners don?t take into consideration, they don?t realize how difficult refinancing will be because of the late payments, getting approved for an auto loan or getting new credit card accounts. Not to mention, having a low credit score will cause utility companies to require a deposit, your interest rate on your credit cards can go up and also you car insurance or home owners insurance can increase because of a lower credit score.
Source: http://phoenixlivingnews.com/mortgage-relief-fund-home-loan-without-refinancing/2011/07/
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