Misinformation regarding loan mods and short sales
Posted 05-25-2010 at 06:17 AM by Tish Thompson
There are a lot of "armchair professionals" who read or hear about loan mods, put their own spin on it, then tout it as if it's the truth. When you are in a situation where you have to do a loan modification or a short sale, seek the help of a bona fide professional...not your buddy Ralph or your sister Suzie, unless they happen to be professionals experienced in loan modifications or short sales.
People will tell you that loan modifications are the answer...for about 4% of the people who need them, they ARE the answer. What many homeowners don't understand is that a loan modification is no different than re-qualifying to buy your own house back. If you've had any change in income, do not hang your hopes on a loan modification. Most lenders will allow anyone to participate in a trial loan mod...which I feel gives homeowners the mistaken belief that they have a chance to save their home. What actually happens is the homeowner is strung along for 3 to 6 months only to be denied...which could have been avoided had the lender taken a few minutes to get more detailed pre-qualifying information.
Something else people don't know about HAMP (Home Affordable Modification Program) is that when you call, whether or not you are in distress, that information is reported to credit bureaus and your file is tagged as a potential for trouble. Your creditors can then decrease your balances or change terms in other ways. If you don't really need help, be careful about the information you divulge.
I am totally for HAMP and any other programs that truly benefit homeowners. I don't like that there are loop holes that take away from the benefit offered to the homeowner. No one should be punished for seeking information, but I digress.
People will tell you that short sales are the same as foreclosures. Those people have no idea what they're talking about. With a short sale, how it's reported on your credit is negotiable. Not the case with foreclosure. With a short sale, whether or not the homeowner gets slapped with a deficiency judgment is negotiable. Not the case with foreclosure. Homeowners participating in the Government's HAFA short sale program are offered up to $3000 at closing to help with relocation expenses. Not the case with foreclosure. In fact, when the bank shows up to evict you, most of them only offer $500 to help with your move. With a short sale, you can buy another home in 2 years. Homeowners should be taking that 2 years to rebuild their credit and save money so that they can buy a home they can actually afford. Foreclosure isn't the same. If you're able to get a loan in two years, what do you think your interest rate will be? How much of your own money do you think you'll have to put into the deal? Do you think you'll be able to choose your lender or will you have to go with anyone wiling to give you a shot?
Short sales and foreclosures are not to be taken lightly. Do your homework so that you'll know the options available to you.
People will tell you that loan modifications are the answer...for about 4% of the people who need them, they ARE the answer. What many homeowners don't understand is that a loan modification is no different than re-qualifying to buy your own house back. If you've had any change in income, do not hang your hopes on a loan modification. Most lenders will allow anyone to participate in a trial loan mod...which I feel gives homeowners the mistaken belief that they have a chance to save their home. What actually happens is the homeowner is strung along for 3 to 6 months only to be denied...which could have been avoided had the lender taken a few minutes to get more detailed pre-qualifying information.
Something else people don't know about HAMP (Home Affordable Modification Program) is that when you call, whether or not you are in distress, that information is reported to credit bureaus and your file is tagged as a potential for trouble. Your creditors can then decrease your balances or change terms in other ways. If you don't really need help, be careful about the information you divulge.
I am totally for HAMP and any other programs that truly benefit homeowners. I don't like that there are loop holes that take away from the benefit offered to the homeowner. No one should be punished for seeking information, but I digress.
People will tell you that short sales are the same as foreclosures. Those people have no idea what they're talking about. With a short sale, how it's reported on your credit is negotiable. Not the case with foreclosure. With a short sale, whether or not the homeowner gets slapped with a deficiency judgment is negotiable. Not the case with foreclosure. Homeowners participating in the Government's HAFA short sale program are offered up to $3000 at closing to help with relocation expenses. Not the case with foreclosure. In fact, when the bank shows up to evict you, most of them only offer $500 to help with your move. With a short sale, you can buy another home in 2 years. Homeowners should be taking that 2 years to rebuild their credit and save money so that they can buy a home they can actually afford. Foreclosure isn't the same. If you're able to get a loan in two years, what do you think your interest rate will be? How much of your own money do you think you'll have to put into the deal? Do you think you'll be able to choose your lender or will you have to go with anyone wiling to give you a shot?
Short sales and foreclosures are not to be taken lightly. Do your homework so that you'll know the options available to you.
Total Comments 0
