Extending The Length Of
My Home Mortgage Loan
In a nutshell my husband became disabled with Multiple Sclerosis and we were all of a sudden down to just my income.
We fell behind in our mortgage payments (for our first mortgage - the second mortgage of $25,000.00 is current) and I am working with my mortgage company to modify my mortgage.
I did not get any help from an outside agency because I just thought it would cost money and I thought I could just negotiate it myself.
It has taken since October to finally get my mortgage company to offer me a loan modification after months of calling them literally daily.
Here is the information on my loan:
Currently our principle balance is 43,000.00 with 11 years left on our current term at a fixed rate of 6.25% and the monthly payment is $710.00
Our mortgage company said we only qualify for extending the term of our loan or a reverse mortgage.
Extending the term of the loan, the offer is:
Principle balance increased to 48,000.00 (for behind payments, interest, escrow etc.) with the fixed rate to continue fixed at 6.25 but the loan term would increase to 40 years and lower our payment to $540.00.
Our only option is to take an offer because we cannot afford to bring the mortgage current.
My question is this....We can now afford the $710.00 monthly payment, we just can't afford bring the loan current so, if we accept the modification and pay $710.00 a month instead of just the $540.00 a month, how long would it take us to pay off the loan?
thank you
Mortgage Loan Modification Answer:
by Loan Modification Expert - Dan North
Ok I got the situation. I am including a multi-function calculator so that you can play with your options.
Use the "What if I pay more every month?" calculator. That will give you what happens with your additional monthly payment.
You can also look at the "Standard vs Bi-weekly" calculator. This is a 19 in 1 calculator so there are some other options you may want to look at.
Keep in mind there may be pre-payment penalties which you would need to add into your costs. Ask if there is a pre-payment penalty and what it is.
As far as the offered modification goes it sounds like they are offering you a repayment plan or the extended loan. That is not a great deal but it is better than losing your home.
Here is my advise: Make a counter offer on the loan modification of an extended loan. Counter offer a modification of 4% for 5 years stepping up 5% at year 5 and 6.25% at year 6, with the missed payments and escrow added onto the end of the loan and any penalties and extra financing charges forgiven.
(Note: What I proposed is just an example of a possible solution. You could make any counter-offer with different terms.)
You can play with the numbers in the calculator options to see what works best.
The main point is don't just take the two options offered. Make a counter-offer that works for you. Even if the modification you counter-offer is to just have your missed payments added to the end of the loan and keep your current rate and the loan only extends for the added payments. (I would not offer that first as the solution.)
It is a negotiation, they just may accept the first counter-offer you make. They may not, so leave some negotiation room.
You do not have to accept their first offer. The modification they are offering is totally arbitrary. They could offer you reduced interest.
In fact, if they are following HAMP the first thing they are supposed to do is reduce interest down to as low as 2% to reach a payment you can afford before extending the loan.
You can do this on your own and 4 months is not bad for a modification. Believe me I know how long it can take. You are doing good now push it to the next level and ask for the modification that you want.
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