Loan modifications are only truly relevant in the real estate world when property values have dramatically declined, similar to what has happened recently in Orange County, CA. Since the Orange County real estate economy has been rising since 1997, most people here have had no need to learn about loan modifications. Therefore, when a homeowners mortgage needs to be addressed for any reason, refinance is the initial thought. Refinancing is advisable in a stable or increasing market. It gives homeowners the ability to take cash out when needed, lower their interest rate, fix their interest rate, as well as other options.
In today’s declining market in Orange County, refinancing is available to only a select few. Getting approved for a traditional refinance is extremely difficult. This is due to Wall Street is no longer purchasing loans from originating banks, lenders have cut programs to less qualified borrowers, and loan to value ratios have substantially increased in Orange County and elsewhere. If the government is not guaranteeing buying loans then most brokers and lenders will not release their funds. Fannie Mae, Freddie Mac and FHA are the Government Sponsored Enterprises (GSE’s) who are supposed to come to the rescue but are unable to do so in the recent financial crisis that hit Orange County and the rest of California.
Potential Orange County homeowners or current homeowners looking to get financing must now have superb credit , lots of equity in the home (or larger down payments), provable job security, disposable income after the bills are paid and proof of the ability to repay a large mortgage. If any of these conditions these conditions are not met, getting a refinance (or new) loan is almost impossible. When considering refinancing in a market where equity has evaporated, causing loan balances to exceed property value, there is not option to refinance. That is when Loan Modification comes into play.
A Loan Modification is a negotiation with your current mortgage lender(s), in an effort to possibly reduce the loan payments, interest rate, or even the loan balance. A loan modification should be employed if the equity in the home is less then 5%, and the homeowner has had a recent financial difficulty, which in today’s market applies to about 70% of the populace due to the recent word financial crisis.
In today’s declining market, refinancing is available to only a select few, while a Loan Modification is more readily available to the masses of homeowners. For more information about Loan Modifications, please visit our Attorney based Loan Modification affiliate at: www.CaLoanModLawyer.com … or drop them an email at: Info@CaLoanModLawyer.com
Short Sale Information,