A lot of people are in danger of losing their home due to inability to pay their mortgage. Sometimes its job loss or pay cuts, sometimes its because of rates resetting. Maybe its due to healthcare or other bills. Maybe its because they are a real estate agent…. or they are part of some other business that is affected by the economic downturn.
So, our company, CENTURY 21 North Homes Realty, is starting a series of classes to teach people how to work with their lender to modify their home loan to get payments they can afford.
Now, no one can guarantee they can get a loan modified. (And that is a sure sign of someone trying to scam you.) But, our agents have taken professional training and have joined the networks that keep them informed of the banks’ latest forms, processes, timelines, and standards.
What is Loan Modification?
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, it allows the loan to be reinstated, and results in a payment the mortgagor can afford.
We will teach people the loan modification process, how to negotiate with their bank, and how to avoid being scammed. These classes are free to the public and we encourage anyone to attend who is facing interest rate adjustments, possibly thinking of short selling their home, thinking of bankruptcy, or considering just walking away.
Options people might have:
- Lower Interest Rates
- Lower Principle
- Length of Contract
- Type of Loan ( arm to a fixed, fixed to an arm)
And, if a loan modification can not be worked out, they’ll need to figure out what their other options are to avoid foreclosure (like a short sale).
What is the process? Instead of just describing the process, I thought I’d give you a more personal view into the process by working through the process myself now and talking about my experience. After all, like a lot of real estate agents the current market has meant a downturn in my income, which I sure hope will be temporary. Now, since I own other businesses, rentals, and also am an employee, my finances may be a bit more complex than yours. I won’t really go into the exact details of them. But, I’ll take some time over the next few weeks to go through the process and try and get into the details of the process and maybe pass on some helpful info.
First step, working on a personal budget. Yep! The dreaded budget.
If you want to go through this process you are going to have to figure out where you are spending your money, where can you cut things that are not necessary, and in the end… how is a modified loan going to help you keep your home. I’m finding it to be a little painful (no surprise) but also rewarding. I’m already seeing that there are ways for me to cut my personal financial costs.
First thing I’m cutting… the home phone. My wife and I have a cell phone and I can’t really see why I need a landline anymore. I’m also seeing that the credit card balances have built up to where we are getting maxed out on a few. I think its time to cancel the cardss and call the credit card companies to see if they are willing to offer us some help with lower rates, etc.
I’ll need to verify against the bank accounts to accurately reflect what we are spending against the budget. The bank won’t be letting us get by without being honest about our spending. And, once that is done, then we’ll have to start looking at the future budget. But, maybe I’ll make that the next post.