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    Mortgage loan modifications explained.

    Many homeowners have fallen behind on their mortgage and could soon be on the path to foreclosure without permanent help. If this sounds like your situation, you may be eligible to modify your mortgage.

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    Under this option, you reach an agreement between you and your mortgage company to change the original terms of your mortgage—such as payment amount, length of loan, interest rate, etc. In most cases, when your mortgage is modified, you can reduce your monthly payment to a more affordable amount. Under this option, you reach an agreement between you and your mortgage company to change the original terms of your mortgage—such as payment amount, length of loan, interest rate, etc. In most cases, when your mortgage is modified, you can reduce your monthly payment to a more affordable amount.

    This type of loan is sometimes called a prepayment product because the lender agrees to pay off the debt in installments over a certain period (typically 30 years), usually after five years of faithfully making all your mortgage payments. You may need to make certain lifestyle changes and agree to specific servicing and tracking requirements. Among other things, prepayment product loans are usually not guaranteed by the federal government or other lenders.

    If your mortgage company wants to repossess your home—because you didn’t make scheduled rent payments or failed to make required closing costs—you have a few options that may help. If your housing authority has authorized a change in your custodial representative, this shift could put you in the role of either your primary or secondary payer.

    If you’re facing eviction and find yourself unable to pay your final rent payment or are afraid of being evicted, contacting an attorney can help you prepare a master eviction case that will allow you to stay in your home until the very last minute. Rather than serve eviction papers directly to your new neighbor, the attorney who prepares your eviction case can provide you with a temporary rental agreement that you can live under until your eviction case is resolved or you pay your remaining rent payments or moving costs.

    If your housing authority decides to sell your housing immediately, after paying off your current mortgage, you may have a claim against the company for damages and should have an attorney prepare the appropriate paperwork in your name to protect you in case the housing authority files a lawsuit claiming you knew you were in default and chose to end your rent-stabilized lease early.

    Each state’s legal code and your local housing authority’s rules may apply to these types of claims, although your local housing authority may have more detailed rules that will help you understand your rights. Contact the local housing authority for more details.

    If you’re facing eviction, a good local lawyer can help you learn how best to protect yourself during the legal fight ahead. Though none of these options are guaranteed to get you out of jail or out of your current housing situation, they have been successful in people’s hands who knew they had bad loans but couldn’t avoid default.

    Each week, Hidden Alpha pays a free trial to our writers for their work. You can sign up here to get one for free. (If you’re already a writer for us, you can always request a copy of our contract.

    If you’re interested in modifying your mortgage, contact a mortgage consultant today.

    Regardless of your mortgage status, there are steps you can take to improve your credit score. Maintaining good credit score is imperative to your financial stability and ability to qualify for housing. We see accessibility to credit improve as Americans become more organized and use the internet to connect with each other.

    You can improve your score by making small changes in each purchase you make. Here are five tips for improving your score.

    Your credit score is a reflection of your ability to make payments on time.
    Consistent, on-time payment practices build your credit score. Anyone who buys a car, car insurance, student loans, or landlords leases is subject to inquiries by credit agencies and ultimately is evaluated by lenders. Because you have an interest in your credit score, it’s important to tailor your financial situation to those needs.
    If you’re having trouble making your payments on time, it could be an indication you’re behind on your mortgage. Make extra payments on time, even if it means waiting seven to 10 days total. Avoid defaulting on any one bill or payment. You’ve got to make peace with your debt.

    According to Multiple Listing Service data, the total amount of time you’ve defaulted on a credit card is the single biggest factor in determining your credit score. If you default on your mortgage too, your score will punish you.

    According to Experian, seven days of default is considered serious. Defaults on auto and student loans account for a disproportionate percentage of your negative information. Collections that are not paid off result in a portion of your available credit being consumed.

    These negative repercussions leave you with adverse information not only on your credit report, but on every credit application you submit.

    Small tweaks in each purchase can go a long way to improving your credit score. Below are five steps you can take to improve your score.

    Before purchasing your first home, understand your closing costs. Find a real estate agent who specializes in suggesting closing costs and fees. Make a list of all the fees you’ll need to pay, such as closing costs, selling or renting fees, real estate insurance, title insurance, escrow fees, and legal fees. This way, you know exactly what you’ll pay when buying a home.

    When you know the costs involved in closing on a property, you’re more likely to purchase in a responsible way.

    Unfortunately, this option is not available for everyone. If you can’t modify your mortgage because of your job, family responsibilities, or income, the conventional path to homeownership involves qualifying for a loan backed by the U.S.

    government. These loans offer favorable terms that rival those of high-end private-label deals. Depending on your personal situation, this might not be an option for you. If you can’t modify your mortgage because of your job, family responsibilities, or income, the conventional path to homeownership involves qualifying for a loan backed by the U.S. government. These loans offer favorable terms that rival those of high-end private-label deals. Depending on your personal situation, this might not be an option for you.

    Additionally, some private-label securitization (PLS) products are designed to offer homeowners more flexible payment terms than traditional fixed-rate mortgages. These products offer several benefits, many of which are not available with a loan backed by the U.S. government.

    If your current mortgage isn’t performing or you’re at risk of falling behind on your mortgage payments, it may be time to consider repurchasing your mortgage. This is a strategy that’s not for the faint of heart or those looking to buy a property quickly. Expensive closing fees and other upfront expenses are usually expected, as are lengthy discussions with a mortgage company to verify your income, information on your current debts, and other details around your personal situation that could affect your loan approval. If your current mortgage isn’t performing or you’re at risk of falling behind on your mortgage payments, it may be time to consider repurchasing your mortgage. This is a strategy that’s not for the faint of heart or those looking to buy a property quickly. Expensive closing fees and other upfront expenses are usually expected, as are lengthy discussions with a mortgage company to verify your income, information on your current debts, and other details around your personal situation that could affects your loan approval.
    While modification or replacement of debt doesn’t always provide the fastest path to homeownership, it may be the cheapest option for those who are behind in their payments.

    While you don’t have to do anything to start your mortgage process, it’s important to understand the various hoops you need to jump through. Although the federal government officially supports homeownership by guaranteeing 12 months of homeownership with a qualified low-income homebuyer or renters, different states have slightly different requirements. If your local requirements differ from those in your state, make sure you carefully read the local ordinance and consult an attorney to understand the specific requirements for your area.

     

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