The Charleston Real Estate Search.com

“Loan Mods, Refi’s, Incentives,” oh my!

With all of the talk about the new Government stimulus packages out there, I thought it best to shed some light on the good news.  Sure home prices are still taking a beating for those who purchased in the last five years, but for others, we’re still looking at at least 3-5% appreciation over a 10-year span.  Show me a stock that’s paying that well.

Anyway, for those of you who may be in the Five Year Panic Position, upside down on your mortgage, getting adjusted right out of your ability to pay, or needing to sell for less than you owe, here’s something to chew on.  Loan Modification is the newest tool in the mortgage toolbox helping you prevent foreclosure or short sale.

Loan “mods” can be structured in any number of ways. For instance,

• The borrower’s interest rate and payment can be reduced.
• If the borrower has an Adjustable Rate Mortgage that’s about to adjust higher, the rate can be frozen at the “start” rate instead.
• The loan term can be extended – turning a 30-year mortgage into a 40-year one.
• The monthly payments already missed can be added to the loan’s principal, and the loan re-amortized, making it more likely the borrower will catch up.
• Or the actual loan principal can be reduced.

Sound too good to be true?  It’s not.  Yes, there are limits like everything else but think about it from the bank’s perspective.  If I sold you a pair of shoes and you couldn’t pay me back, wouldn’t it be better to renegotiate your payments rather than add another old pair of shoes to my already over-stuffed closet? 

The dreaded stimulus package that everyone is barking about on television does have some other stuff in it that not everyone will like.  Free market economists say that we should let all of the foreclosures happen, clear the books and start over, something this package is desperately trying to avoid. 

It also has caps on amounts borrowed or modified and still imposes a minimum equity for refinancing but, in my opinion, that’s a good thing.  We don’t want to postpone every foreclosure.  Some homes need to be foreclosed or we’ll never recover. 

So here’s my straight talk: If you made a bad decision two years ago, why continue to hold on to a sinking ship? You should consider short sale, auction, or a quick sale with a GREAT price, even if you have to bring a little bit to closing.

But, if you made a good decision and your circumstances have changed, loan modification may be your best option.  It’s a win for the banks and a win for you.

Helping you help yourself.