Q: I paid my 15-year mortgage for eight years before I suffered a hardship and had to stop making payments. I am trying to get a loan modification and want to know what happens to the equity in my home. And is the modification done on the original loan amount or just the remaining balance of the loan?
A: When your lender looks to modify your loan, it considers your budget to get a payment that is affordable for you to make. Lenders estimate that a person can devote 31 percent of their household income toward principal, interest, taxes and insurance. You do keep your equity. The loan modification amount will be based on what you still owe on the loan, plus the accrued interest and penalties for the time you did not pay.
To get the payment to an affordable amount, your bank will first look to lower your interest rate and will adjust the remaining term of your loan only if it is necessary to spread the payments over a longer time. It’s easy to see what your payments would be if the loan mod is approved by applying the 31 percent formula to your income.
read more at: http://www.utsandiego.com/news/2013/dec/30/tp-loan-modification-based-on-amount-owed/
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Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled.
The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value, eliminating previous limits. That could open up refinancing to legions of borrowers in Nevada, Arizona, Florida, California and elsewhere who are paying high interest rates and are deeply “underwater,” owing more than their houses are worth. President Barack Obama is expected to tout the program in Las Vegas on Monday.
Read More at: http://finance.yahoo.com/loans/article/113695/home-lending-revamp-planned-wsj?mod=loans-home
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