Many homeowners are struggling right now to keep their homes and retain good credit in the face of plummeting equity, a tough real estate market and reduced income. If you are one of these homeowners don't feel alone and don't give up!
You owe it to yourself to try a few things for yourself before you walk away.
1) A simple avenue to help reduce your housing outflow is to ask for a property tax reduction. If you purchased your home or changed title from 2002 to 2007 chances are that you have lost equity and can establish a lower property tax basis. Depending on the previous value of your property this can be a substantial savings. You will need to get a market analysis done by your realtor to establish this change in value, however to start with if you have internet available verify the drop yourself by going to cyberhomes.com (I find this to be the most reliable site) and research your home value, this will tell you if you have a reduction or not and you need this for the next phase anyways.
Assuming that you have lost equity, print out the report and either call a realtor for a comprehensive report and go in to see the tax assessor staff to ask about a reduction.
2) Most banks now have a full scale mortgage modification department, open long hours and well staffed. You may be able to modify your mortgage yourself without hiring a company. Since modifications run from 2000 and up it is worth trying yourself - preparation is the key, this process is much like applying for a new mortgage. You do not need to be late or behind to attempt this process! For verification about your eligibility for a modification you can go online to makinghomeaffordable.gov. You will need a full income and expense package, tax returns and a solid hardship letter explaining what has changed in your life to create the need for the modification. Remember, mortgage modifications do not hurt your credit, late payments do. A short sale or foreclosure is about a 300 point hit on your credit, plus with a foreclosure you will have to disclose the loss of a home on mortgage applications in the future, even after you repair your credit.
To start with there are three basic modifications:
Interest Rate Reduction is the most common and can be temporary or permanent. Many homeowners have an adjustable rate loan, banks will frequently change that to a new low fixed or stepped loan to reduce the payment.
Extension of Time is the next most common form of modification, and most banks will extend to 40 years to reduce your payment.
Principle Balance Reduction is the least common but most beneficial, if you can negotiate this you are serving yourself very well. The Principle reduction is actually reducing the loan amount which allows you to reduce your overall mortgage indebtedness; it also potentially may allow you to at a later date sell your home without having to take the credit hit of a short sale.
Many Banks are willing to do a onetime reinstatement agreement if you are behind on payments. This means the bank takes the amount you are behind and spreads it out over a length of time, averaging 3 to 6 months or rolls it onto the back of the loan in order to bring your loan back into good standing.
Banks will frequently be willing to grant a modification of a combination of methods to get to a payment you can realistically afford, of course they also take into consideration all of your other debts and whether your spending habits are frivolous or not before they agree to modify your income tax loans near me. Many people who get modifications still end up defaulting to the banks really need to understand that you want to retain your home and that you intend to and can really make the new reduced payment every month without fail. The Bank needs to see that you do indeed have the necessary income; many homeowners make the mistake of trying to show that they are without income for sympathy, but in reality the bank will not modify your loan unless you can verify that you do have the income within your household to make the payment.
To get started call your mortgage bank and ask for their mortgage modification package to be mailed to you or visit their website to download, print out and fill in the package. You then need to prepare your income and expense report, (the current administration like to see homeowners at no greater than 38% of their Income for housing so keep that in mind), have your tax returns for 2 years handy, have your Cyberhomes property valuation or market analysis handy and a hardship letter . Now you are ready to call the mortgage modification department and fax, mail or e-mail them your package. You will need to call regularly after you submit it, first to make sure that they are in receipt of your package and then weekly to get a status update. Always take good notes including the name and direct number of the person you talk to, be calm and patient, and don't be afraid to ask for a supervisor though if you feel that you are getting the run around.
If your bank is completely unwilling to cooperate you can call HUD for help and advice, you can research the mortgage modification company route, and you can consult with an attorney and perhaps hire an attorney to handle it for you. There are number of good ones locally, and usually your lender of realtor will know who they are and the average cost. Good mortgage modification companies do not ask for any money upfront until they verify that you have a case, which means they have taken in your information and verified that there are RESPA or TILA violations through a forensic audit of your original loan file (yes you will need all the original documents for this and or sufficient hardship to make a viable case for reduction. In order to get a principle reduction you will likely need an attorney based company. Also make sure that your payment goes into an escrow account and is used incrementally as the case goes forward so that if you decide to cancel you get your remainder balance refunded.
If all else fails, please talk to your realtor and try the short sale route before you walk away and become another foreclosure statistic. There is more information about various programs and where to get help available at financialstability.gov.
Teresa Dietrich, Realtor/Consultant CA. RE 01222347
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