Home Loan Modification: What Is It?

Home loan modification refers to the restructuring of mortgages for borrowers facing financial hardships, enabling them to pay off their home loan payments. In this arrangement, home owners work with their lenders to change the terms of their home mortgages, saving their homes from foreclosure. At the same time, lenders are able to recover their money in a restructured program.

Home loan plans fall under the US government’s Home Affordable Modification Program, which was unveiled in February 2009. This program was aimed at reducing the monthly mortgage payments of struggling home owners to sustainable levels. In view of this, home loan modification programs have to conform to the standards set by US government.

Mortgage modification is an effective tool for you if have fallen behind on your home loan payments and are faced with financial hardships. As the loan is restructured to make it more affordable, you are able to pay it off without losing your home or sinking into debt. Key aspects of the loan such as interest rates, monthly rates and any penalties incurred are changed, enabling you to pay off the loan from your available income. However, in order to enjoy all the benefits of mortgage modification, you need to qualify for one.

The following qualifications make you eligible for a mortgage modification.

One of the qualifications for home loan mod is that one must have originated his or her home loan prior to January 2009. This requirement was put in place in order to prevent opportunists from taking advantage of the program. You must also be the owner-occupant of your home. The other qualification for home loan modification is that you have to owe more than your home is worth. According to the US treasury department, a person with a mortgage balance which is higher than the home’s current value may qualify for home loan modification. Another qualification is that you need to prove that your current financial status has suffered significant hardship. This could be as a result of various conditions such as increased mortgage payments, medical bills or reduced income. At the same time, your monthly mortgage payments must exceed 31% of your gross monthly income.

Lastly, you need to prove that you can afford to pay the proposed monthly installments after the mortgage modification. Keep in mind that the reason for the modification program is to enable you to pay your loan, not to exempt you from paying it. In view of this, if you cannot afford to pay the proposed installments, you will not qualify for the home loan modification plan. This requirement ensures that people who knowingly took home finance that were beyond their means will not take advantage of the program.

In addition to the above mentioned qualifications, you also need the following information in order to qualify for mortgage modification. You need to provide information about your monthly gross income and assets. Further, you also need to provide information regarding your recent tax returns. You will also be required to provide account balances and monthly payments which are payable on all your credit cards. You should also present information on monthly payments and account balances of any other debts you may have such as car loans.

Finally you need a letter detailing the circumstances that led to the reduction of your income or increase in expenses. Once you have gathered this information, you should contact your lender in order to be considered for home loan modification. The lender will then assess your financial status in order to determine whether you qualify for loan modification.

You may need to hire legal counsel for guidance in the process, to help you negotiate for the best possible terms. You can get a list of approved housing counselors form the US Department of Housing and Urban Development just to be sure.

Follow A Few Simple Steps To Make Shopping For Your New Home Loan A Little Easier

It is likely to be one of the largest purchases of your life, and it can be extremely nerve racking and overwhelming. Buying a new home! Whether you are buying your first home, or moving to a new home; purchasing a home and shopping for home loans is a major decision that requires a lot of time and energy.

Where Do I Start?

If you are shopping for a new home and a home loan for the very first time then you may become very overwhelmed very quickly if you do not take it slowly. The first thing that you should do is start researching your options. Collect all of the financial information that you have and approach your bank.

A good place to start is with the financial institution that you do most of your banking with. You have likely built up a reputation and perhaps a relationship with your bank and that will help when you are trying to get a loan. You will have to gather together all of your financial information including:

* Pay stubs

* Proof of other income sources

* Car payment records

* Other debt information

* Savings and investment information

Your financial institution should be able to determine from the information that you bring in what type of a mortgage you qualify for. The bank or financial institution will also pull a credit report for you to see how your credit looks.

Should I Only Visit One Bank?

No, definitely do not stop shopping for a mortgage after visiting only one financial institution. It is definitely a good idea to shop around for the best mortgage rate. Different institutions may offer you different payment options and lower interest rates. If you have poor credit, then you may want to talk to a mortgage broker who will likely be able to offer you some options that you can afford.

Get Pre-Approved From Your Bank

Before you even go out house hunting it is a good idea to get a pre-approval from your bank or financial institution. This process will take a little bit longer, but it will pay off in the end because you will know exactly what price range to look at when you are house shopping.

Another benefit to being pre-approved is that when you find a home that you are interested in, if the seller is in a hurry to sell, they will often go with a buyer who has been pre-approved because it is a sure thing.

What About The Interest Rate?

It can be overwhelming when you go to get your home loan; there are so many decisions that have to be made. Do you want a variable interest rate or a fixed interest rate? How do you decide?

Your decision will likely depend on a number of factors in the market place, most importantly, what the interest rate is at the time that you get your home loan. In the past few years, the market has seen a sharp decrease in interest rates. In fact, some of the lowest rates in history have been experienced in the last few years.

If the interest rate is quite low relative to the last few months when you apply for your home loan, than you may want to consider locking into a fixed rate mortgage. That way, even if the interest rate climbs in the future, you will be guaranteed the same low rate that you signed on.

However, if you think that the interest rates are still likely to fall then you may want to sign in on a variable interest rate home loan. That way if the interest rate falls, you can still take advantage of the new lower rate. You will want to check with your lending institution on the variable rate home loans that they offer, as they do differ greatly.

What Term Length Should I Choose?

Another big decision when you apply for and sign onto a home loan is the term of the loan. This is a very important decision because the length of the loan will determine how much interest you will pay over the term of the loan. There are a few ways to look at this problem. If you require low monthly payments than you may want to choose a longer term loan, such as a 25 year or a 30 year term instead of a 15 year term. If you extend the term of your loan, then your monthly payments will be lower, however in the long term you will be paying more interest.

If you are in a situation where you are able to handle slightly larger monthly payments, then you will be paying off the principal of your home loan much faster, and not paying as much interest.

Are There Other Ways Of Paying My Loan Off Faster?

Most types of loans will allow you to make balloon payments at least once a year. A balloon payment is where you can pay directly on the principal of the loan, so you are not paying any interest. This is an excellent way to reduce the principal of your loan. And if you are able to make balloon payments, they are worth it.

So Now What?

When you are ready to start shopping for a home loan, whether it is your first or your second, remember to do your research. A good place to start is with a mortgage calculator. You can find a mortgage calculator on the internet. This is an excellent tool to help you make some of the tougher decisions about your mortgage. But there is no replacement for discussing your individual case with a financial institution. Just remember to shop around before you decide which home loan is right for you.

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Do You Know the Difference Between Advertising and Marketing?

Word of mouth marketing is a billion dollar industry. It’s also the fastest growing factor in both advertising and marketing. Many business owners do not know the difference between advertising and marketing often mixing up and confusing the two.

Advertising and marketing are individually very important and very different. If you want your business to have any chance of succeeding it is imperative you thoroughly understand and know how to distinguish them.

The dictionary terms for advertising and marketing will not be described. Even looking up the technical definitions may still leave you confused. Advertising and marketing will be described according to your business and product or service you provide.

Advertising is the means of publicizing yourself through different media. The main purpose of advertising is for branding – namely product or name recognition. There is little psychology or concept behind it. The demand for Advertising is high and so too is the price. We are now bombarded with so much of it we basically ignore it. Because of its high exposure level, advertising is becoming increasing inefficient.

Once upon a time you could build a business on advertising alone. Today this is virtually impossible. Most small businesses do not have the big money needed to advertise long enough to start getting results. Marketing on the other hand goes much deeper. It’s the psychology of the entire sales process. Advertising is simply one of the steps or stages in the marketing process.

Marketing is the concept and strategy behind creating your campaign. It involves how you position your business to encourage your consumers to come to you – without having to “sell” to them. One of the most effective ways to do this is through education. I advise you to use your marketing materials to provide them lots of content to educate your consumers about your service and what it can do to improve their life. Nobody wants to be sold. Yet people are happy to buy if you give them a list of reasons why. Let your consumers come to their own conclusions instead of commanding or bullying them into coming to you.

Education is a powerful driver in ensuring clients come to you and letting others know about you too. Providing content for your consumers to make up their own mind about your business is an important factor in word of mouth marketing. And it takes little effort on your part if you take the time to put some thought into your marketing campaign.