LOW INTEREST RATES & LOAN MODIFICATIONS

Well, these are certainly tumultuous times we're living in. However, the tumult is working out in favor of many homeowners. The interest rate reduction has created a refinance frenzy, with many homeowners getting interest rates around 5%. But, how can you get that interest rate when you're behind on payments and you owe more than what your home is worth...ouch! It ain't a pretty picture. But, maybe there's an answer...

Now may be the time to look into a loan modification. What happens is you negotiate with your lender to restructure the terms of your mortgage and get a lower monthly payment. For instance, wouldn't it be a sweet deal to get your interest rate lowered from 7.125% to 5.50%? Or maybe your loan can be extended from 30 years to 40 years. How about maybe even reducing your principal balance by "x" number of dollars? All of those things are possibilities, especially given the current state of the economy. Most people who get loan modifications are in trouble with their mortgage, of course resulting in delinquent mortgage payments and the possibility of a date with foreclosure. But, the real deal is lenders don't want to foreclose on you because it costs them a lot of cash, wastes a lot of time and creates a ton of headaches. Wouldn't it be nice for them to avoid all of that madness by keeping you in your home, while they still continue to make money? You bet! The loan modification is designed for you to get a monthly mortgage payment which fits into your budget. You or your representative submit a proposal to your lender stating what got you into the financial mess you're in and how the loan modification can bring you back to solvency.

There are a couple of ways to go about getting the loan modification. First, you can request a loan modification package from your lender and do all the work yourself. Second, you can hire a company that specializes in loan modifications to do all the grungy work for you. If you go that route you may want a company with an attorney on staff to protect your legal rights.

Anyway, if you have any questions about the process and the easiest way to get it done, feel free to give me a buzz at 973-736-3496.

Check out my website Get Me A Mortgage or feel free to shoot me an email at KirkCharles@comcast.net.

FHA is A-Changin'

Oh well, I guess it had to happen. FHA is turning up the heat on us in several different ways! It's raising its down payment amount from 3% to 3.5%, effective January 1, 2009...at least that's the plan. If you're purchasing a $300,000 home, instead of putting down $9,000 you'd have to put down $10,500. It ain't a big difference, but it's something to keep in mind.

Also, the up front mortgage insurance premium (MIP) you have to pay to get an FHA mortgage was raised from 1.5% to 1.75%. The good news is the up front fee can be added onto your loan amount. For instance, if your mortgage is $200,000, the 1.75% fee (or $3,500) is added onto your mortgage, making it $203,500.

To top it off, the monthly insurance premium has also been increased for mortgages above 95% LTV. What does that mean? Simply, if you put down less than 5% on your mortgage, your monthly mortgage insurance percentage is slightly increased. I won't bore you with the calculation, but it's only a small amount per month.

For a further explanation of the skinny on FHA shoot me an email. For the official FHA word go to the Official FHA Website.

What does it all mean? Of course, more money outta your pocket. If you wanna play you gotta pay!

See ya,

Kirk Charles
Author & Sr. Loan Officer
973-200-3253 (o)
973-919-8065 (c)