When attempting to refinance or modify your current mortgage the first step is to see what you qualify for.

REFINANCE OPTIONS

Option 1 is a Government Backed FHA loan.

This is usually the best option due to:

Extremely Low Interest Rates 

Looser Credit Score Requirements  

And the ability to Refinance up to 95% - 125% of the value of the home.

Option 2 is a Conventional Loan.

This is the second best option.
Rates are also extremely low for Conventional loans

And a homeowner is able to refinance up to 90% of the value of their home.

The first step is to look at a homeowners W2’s and Tax Returns and see whether or not they qualify for an FHA or a Conventional Loan.

What we have found is that there are two main factors that may cause a homeowner to no longer qualify for either a Government Backed FHA Loan or a Conventional Loan.

Reason 1: "Debt to Income"

The main reason that many people no longer qualify for either an FHA or Conventional Loan is due to high Debt to Income Ratios.

In order to qualify for either an FHA loan or a Conventional loan, homeowners must have a Debt to Income Ratio of no greater than 50%.

This means that if a household made 1000.00 on average per month over the last two years they would have to save half of their income each month after they pay all bills that show up on their credit report (including Mortgage, Taxes, Insurance, Credit Cards, and Vehicles).

As you can imagine not many people fit this description today.

Reason 2: "Loan to Value"

The second reason that many homeowners no longer qualify for an FHA or Conventional Loan is due to high Loan to Value Ratios.

This means that many homeowners owe more than 90-95% of the current value of their home, due to dropping home values and increasing loan amounts.

Most lenders will not refinance a homeowner if they owe more than 90% of the current value of their home.

Because of this an entirely new industry has been created in the last 3 years.

 

This is the Loan Modification Industry.

Over the last 5 years, many people qualified for loans based on Stated or Low Documentation Loans.

All a person needed to qualify for a loan was good credit scores, equity in the home and a little bit of cash reserves.

Today, banks can no longer qualify homeowners based on “Stated” income and many people are left with loans that they no longer qualify for. Many of these homeowners have loans that are set to adjust in the near future and they no longer qualify for a traditional refinance (even with their own lender)!

This is where loan modification becomes necessary.

The loan modification industry is almost exactly like a refinance.

Homeowners need all the same documentation (W2’s, Tax Returns, Mortgage Statement, Pay Stubs, etc.) to qualify.

The only difference is that instead of qualifying to refinance with a new loan and a new bank, we use the documentation to renegotiate the terms of the loan with the same bank.

The goal is to negotiate a lower rate, payment and even principle balance to something that the homeowners actual income can support.

There are close to a dozen programs available now TO FORCE the lender to work with us.

The goal is to review your income and your expenses and come up with a strategy to negotiate with your lender using a Real Estate Attorney to come up with a new, LOWER INTEREST RATE that will DRIVE your Debt to Income down to Reality (where it should have been in the first place).

Interest Rates are as low as 3.5% - 4.5% today for FHA and Conventional Loans.

Rates are as low as 2% – 4% today after negotiating a Loan Modification.

Please contact us at your earliest convenience to see if you qualify for an FHA Loan, a Conventional Loan or a Loan Modification.