How Forbearance Can Help Save Your Home
With forbearance, your lender will offer you a workout program requiring you to immediately pay approximately 20% of your delinquent loan arrearage amount, while adding the balance of the delinquency to your regular mortgage payments over a 6 month to 48 month period. Forbearance plans will not remove your lender’s right to foreclose, but it will stop the foreclosure until the loan is brought current. It’s a way to save your home from foreclosure.
Additional Types of Modification Plans
The following are additional types of loan modification plans that may work for you as well:
Reduced Interest Rate
Reducing your interest rate is an effective way of lowering your monthly mortgage rates. This works the best if you have a variable interest rate loan, and your lender agrees to reduce the rate by at least 2%. Most rate reductions are flexible adjustments tailored to your needs. Since rate reductions cost lenders money, they like to make them temporary. Typical rate reductions are five years, and then the rate reverts back to your old rate.
Arrears are Capitalized
Your lender may also add your arrearages to the back end of your loan balance to get you caught up on your monthly payments. This is not reducing your debt, but only making you current so you don’t fall into default. Your new payment will be higher because your loan balance has increased. If you don’t have the money to make the increased mortgage payment, this method won’t help you and will make matters worse.
Extension of Your Loan Term
Nowadays it is common to see lenders extending loan terms to 40 years. Most fixed rate loan terms are 30 years, with another group of fixed rate loans at 10 or 15 year terms. If you need a substantial decrease in your monthly payment, then you probably will need to negotiate a combination of a lower interest rate and a longer loan term.
Freeze Your Interest Rate
For adjustable rate or sub-prime loans, freezing the new rate so that the payment stays the same is a good option if you are not going to be able to refinance or modify the interest rate and the loan term. This option is only good though if you can continue to afford the same payments you have been making.
Reduction of Principal Loan Balance
This is really the best solution for today’s upside down homeowners because it would reverse any negative equity. Lenders don’t like this option because it costs them money. However, they should consider it because in the long run a default resulting in a foreclosure action is equally, if not more, expensive.
Step Interest Rate Reduction
Step interest rate modifications work for borrowers who have lost their income, have reduced income or work on a commission basis. The rate is lowered for a year or two and then increased in steps until the final year when it becomes a fixed rate.
Your Best Solution – The Cameron Team
Since most distressed homeowners are not aware of these modification solutions, they don’ know what to do to save their homes from foreclosure. The Cameron Team is in the business of saving homes from foreclosure. We don’t want to see another home lost. To accomplish this, we work as a team to find the best solutions for our clients. Whether it is a mortgage modification, short sale, short refinance or other method, we use our best efforts to achieve your goals, and we won’t stop until you tell us to.
Our success in helping people save homes in the Scottsdale, Phoenix and surrounding communities of McDowell Mountain Ranch, DC Ranch, Silverleaf, Grayhawk, Desert Ridge, Desert Highlands, Troon, Ironwood Village, Pima Acres, Dove Valley Ranch, Tatum Highlands and Tatum Ranch speaks for itself. Just recently, we successfully negotiated 6 short sales and helped our clients with several other mortgage modifications and refinances.
The key to our success is we have established long term relationships with lenders and their loss mitigation departments. We focus on the solution that is best for everyone. Because we work as a team, we can devote more time, energy and a combination of skills to provide you with a high level of service in obtaining the results you need.
480-652-2004