Question by John H: How can i lower my mortgage payments without refinancing?
I’ve heard from a friend that Obama came up with a new plan, anyone know what that is or about? Whats the right way to go to lower my payments without having to refinance? Thanks
Answer by bowke28
Despite the rumors, here is no “Obama plan”. anyone who says there is is full of crap. If you are behind in your payment, you may be able to negotiate a loan modification, but it’s rarely offered, and even more rarely finished. If you are in over your head as far as payments go, then selling or refinancing is your only option. Also, without knowing more details, there is not a whole lot of advice to give on this.
Know better? Leave your own answer in the comments!
as far as I know refinancing is the only way. There are programs now for those whose homes have gone into foreclosure but the programs don’t fit everyone. I think your friend misunderstood since the only way to reduce your mortgage payments is to refinance and you should only do that if you’ve owned the home more than 15 years since there are fees you’d pay to do that and you have to have paid part of the principal down to do it.
There is a program called HAMP.
“The Making Home Affordable Program …If eligibility criteria for HAMP are met, the servicer will adjust the terms of the mortgage to reduce the borrower’s payment to HAMP’s target front-end debt-to-income (DTI) ratio of 31 percent….
1. Value of the home relative to the size of the mortgage.
2. Likelihood that the loan will be foreclosed on.
3. Trends in home prices.
4. Cost of foreclosure including:
a. legal expenses,
b. lost interest during the time required to complete the foreclosure action,
c. property maintenance costs, and
d. expenses involved in reselling the property.
5. Cost of conducting a modification including:
a. a lower monthly payment from the borrower,
b. likelihood a borrower will default even after the loan is modified,
c. financial incentives provided by the government, and
d. likelihood that a loan will be paid off before its term expires (prepayment probability).
The only other option I know is loan modification. It’s very difficult to meet the requirements of a loan modification though.
In any case, you may find helpful info here:
I have some information for you
Document your financial hardships. To lower your mortgage payment without refinancing the home loan, the mortgage lender restructures the loan. However, not everyone qualifies for this provision. Before approving a request, lenders will review your financial situation and determine whether you qualify for help. Legitimate reasons include loss of employment, illness, injury, disability, etc. You’ll need to retain copies of all your financial statements (paycheck stubs, banking statements, bills, unemployment compensation).
Take immediate action. Rather than wait until the situation gets out of hand, contact your mortgage company at the first sign of trouble. Lowering your mortgage payment without a refinance is a lengthy process, and it can take weeks to obtain an approval and finalize the paperwork.
Ask for a loan modification. One type of loan restructure is the mortgage modification, in which lenders agree to reduce the interest rate or extend the loan term to lower the mortgage payment. You lender might suggest this provision. If not, request a loan modification.
Submit a proposal. You can ask the lender to convert your interest-only or ARM into a fixed rate, or you can request a loan extension. In some instances, the lender may temporarily suspend payments for a specified time period.
Negotiate with the mortgage lender. Lenders vary, and some may not agree to your proposal. Arrange a meeting with your mortgage lender and discuss your options.
You can find more information about mortgage here http://www.allmortgagesolution.com
Well in regards to the new plan, you might be thinking of the first time home buyers tax credit, which provides up to $ 8,000 for homes purchased in 2009 and does not need to be paid back. There are also plans to make it more difficult for lenders to foreclose.
In regards to lowing your monthly payment, one of the best ways to do this, without refinancing, is to pay some of your principal down. However, you may also be able to speak with your lender, because it is probably in their best interest not to have you go into default, so they may be able to help work with you.
You can do your own loan modification to get your payments lowered.
http://loanmodification.findhere.org tells you how to do your own loan modification
Refinancing is pretty much your only option. You can also ask your bank to extend the payment period, but it is the kind of refinancing as you take the remaining amount you own for longer time (new loan).
Refinancing is not that bad and if you have been paying on time you will have no problems with doing it.