Do you owe more than your house is worth? You are not alone. Many homeowners are finding themselves in with a house that they owe more than its current market value. So what should you do?
Here are some options for homeowners with “underwater” mortgages:
Stay and Pay
Compare the monthly mortgage payment, plus carrying costs like repairs, homeowner dues and taxes, to the cost of renting. If you decide to stay and pay, you may be able to get financial help to catch up with payments if you run into a financial hardship. For example, the Emergency Homeowners Loan Program (EHLP) provides interest-free loans to homeowners who have fallen behind on their mortgages. Make sure to check with a HUD-approved housing counseling agency in your area to find out which programs may be available to you.
Refinance
The Home Affordable Refinance Program (HARP) helps homeowners who qualify refinance into a low, fixed-rate loan. The program has been extended through June 2012. For those who qualify, the terms are similar to those of any other conventional loan, but without the steep mortgage insurance that is typically required when there is less than 20% equity in the home.
Loan Modification
A loan modification means lenders lower the interest rate and payment, either temporarily or permanently. Lenders will also typically extend the term of the loan or to allow borrowers to make up missed payments by tacking them onto the end of the loan or spreading them out over the remainder.
The most well-known modification program is the government-initiated Home Affordable Modification Program. The Treasury Department reports that homeowners who were successful in getting permanent modifications on their loans through this program saw a median reduction in their monthly payment of 40 percent—more than $520 each month—amounting to a program‐wide savings for homeowners of an estimated $4.5 billion.
Short Sale
A short sale is when you sell your home for less than you owe. For the homeowner/seller, the goal is to get the lender to approve a short sale and forgive any remaining debt. Lenders do not always accept a short sale. It seems to make sense rather than allowing a home to go into foreclosure, but the red tape involved in a short sale can sometimes be overwhelming. The Home Affordable Foreclosure Alternative program (HAFA) is a government-initiated short sale program.
Foreclosure
According to RealtyTrac, one in every 605 homes received a foreclosure filing notice in May 2011. Foreclosure can have financial, legal and tax implications. For many homeowners, this is their last alternative.
Bankruptcy
If you need to stop a pending foreclosure, bankruptcy may halt a foreclosure long enough to get a loan modification considered. Filing Chapter 13 can help you catch up on payments over five years without interest. You may be able to reduce or eliminate other debts, freeing up more money to pay toward the home mortgage so you can get back to positive equity more quickly. This can be a very serious decision so it is imperative that you talk with a bankruptcy attorney before the foreclosure or short sale is completed.
This is a Contemporary/Ranch style home and features 7 total rooms, 2 full baths, 1 half bath, 4 bedrooms, 0.94 Acres, and is currently available for $379,900.
For complete details click here.
You’ve heard about the Credit Crunch and its tightening effect on lending guidelines in the mortgage industry, but what does it mean to millions of Americans who need student loans to help pay their college tuition? Here is what you need to know from Credit.com.
The student loan market looked pretty bleak during the first quarter of 2008. Not only did the reduced benefits created by the College Cost Reduction and Access Act in 2007 kick in, but for the first time in 40 years, no bonds backed by student loans were purchased during this time. The new bill, which was good news for students, was funded by cutting subsidies to student lenders already feeling the effects of the credit crunch. According to Forbes, this loss of liquidity spooked a lot of investors of the student loan asset-backed securities market, destabilized Sallie Mae, the largest federal student loan provider and servicer, and sent student lenders into turmoil, as at least 50 federal student loan providers scaled back or ended participation in this type of lending.
Since then, Congress has passed legislation and taken other measures to ensure that student loan companies continue to issue federally subsidized student loans. Now, according to the National Association of Student Financial Aid Administrators (NASFAA), most “traditional” students should have no problem getting federal student loans from the remaining 2,000-plus lenders participating in this market.
For those students forced to seek private or alternate education loans, however, this is a much different story. NASFAA says many students could have trouble getting these types of student loans. Because of this, NASFAA added that private student loans should only be used as a last resort when it comes to paying for college.
Which students are affected?
Students attending smaller schools and for-profit career or trade colleges, or other institutions that rely heavily on private lenders, will find it more difficult and expensive to gain access to private student loans than they have in the past – especially if they have credit issues.
Older students, students with poor credit, or those students without a creditworthy co-signer (e.g., mom and dad), are likely to pay higher rates for whatever private student loans they are able to find.
Students whose college tuition is more than their federal loans provide could also be affected if a) a private loan is necessary to make up the difference or b) the student does not qualify for Federal Perkins or PLUS loans or other types of financial aid programs.
It’s important to note that financial aid, including Pell Grants, Federal Work Study, and education tax benefits are not affected by the Credit Crunch.
This is a Cape/Saltbox style home and features 6 total rooms, 1 full bath, 1 half bath, 3 bedrooms, 1.15 Acres, and is currently available for $229,900.
For complete details click here.
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