I know of someone who had a mortgage payment of 1500 dollars and went through some type of program to get a lower interest rate. Now their mortgage is 650 dollars.
Yes there are several government loan modifications programs out to help you lower your payment. FHA, HAFA and HASP just to name a few. Click the link below to learn how these programs work and to find one that meets your needs.
Can someone do a modification and have their mortgage payment decreased by 850 dollars?
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Yeah, sure. No lender is required to do any modification, and I strongly doubt a payment went from 1500 to less than half that.
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It is possible as a very short term modification, but trust me they will end up paying for that $850 per month on the back end of the loan. NO bank is going to just write-off over 50% of a loan and still let the person keep their home.
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Yes there are several government loan modifications programs out to help you lower your payment. FHA, HAFA and HASP just to name a few. Click the link below to learn how these programs work and to find one that meets your needs.
References :
http://sitesetup4u.hostei.com/loans/loans.html
I knew of one such program that allowed a lower payment, but it was available upon the inception of the loan. It was what my loan officer called a "buy-down" program. Basically, it had a very low interest rate for the 1st year, then 2nd yr, it increased 1%, and 3rd yr and beyond, it increased another 1%. So interest started at 5%, for example, and ended at 8% for the rest of the loan after the 2nd yr. This was available for first time home buyers through FHA (at the time). Don’t know if a refinance would allow that.
Maybe they got an Interest only loan. Or originally had a 15yr mortgage, and extended it to a 30yr mortgage after refinancing.
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Yes, but how long is their loan now? 40 years? How long is that $650 payment? 2 years?
They aren’t telling you the entire story. Their payment is NOT going to be $650 for the next 30 or 40 years.
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Their mortgage may be temporarily reduced to $650, but it’s not going to stay there. NO lender is going to permanently cut a mortgage payment to less than half. Doing so would cause such a mortgage to take over 75 years to pay off.
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This depends on a number of things:
It is very common for a homeowner to receive a "temporary modification" and save as much as 1/2 off their original mortgage payments. I have seen people with $1800-2000 monthly payment drop by $800-$1000 after a modification program.
The lender generally reduces the interest rate for a set period of time ( say 2 years). Then, it will steadily increase, hopefully very little, over the next 5, 10, 15, 20 years. It generally has a capped interest rate, so they will not go over that rate.
Your lender may also give you a principal reduction – which essentially relinquishes you from responsibility of a small portion of your loan. In essence, the bank drops a portion of the loan that was due to interest rates / taxes / penalties. Other banks will defer payments till your term end… so be careful, cause they "could" defer all those payments to your last month and then you get SLAMMED with thousands of fees / penalties / taxes.
Just for comparison, I did a modification today for a homeowner with a $1894 monthly mortgage payment. She is now paying $1240/month – $650 savings each month. It is very common, very possible, and very helpful to obtain a mortgage modification…. just avoid those scam companies like the plague! The company http://www.freeHAMPreport.com has been featured in NBC, AOL, FORBES – so you can trust them! They have succesfully completed over 400+ modifications and have saved homeowners thousands and thousands of dollars!
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Modification Manager at http://www.freeHAMPreport.com
it depends on what was included. the lowest the rate can be on a modification is 2% and a 480(40yr) loan term but you also have to include escrow for taxes and home insurance and any private mtg insurance if they have that on top of that so I have seen many people cut their pmts down from 1500 to 650 yes if their escrow pmt is low and they don’t have a huge principal balance. I would strongly recommend anyone having a financial hardship at all(reduction in income, increase in expenses, divorce, loss of income, death, birth) to apply for a modification its free and you get a better deal than any refi out their. keep in mind this will and can affect your credit score in a negative way but its usually worth it. call your mortgage lender for more details on your specific situation. and although the lender extends the loan term their is never a prepayment penatly to payoff sooner if you can afford so even if you could continue to make the reg pmt the interest rate could still be at possible 2% in a lot of cases and you could payoff the loan a lot faster than the set term.
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mortgage underwriter in loss mitigation for 9yrs