So…you don’t have enough equity to refinance the “regular ” way…What can you do?
One big problem for people is that if they want to do a loan modification they have to sacrifice their good credit, wade through endless paperwork, and wait around for months for an answer that may or may not be worth waiting for. Loan mods are for those who can’t make it work any other way. What are your alternatives?
If you have a mortgage owned by Fannie Mae or Freddie Mac (I know you have heard those names…) you have more options than if you didn’t. Did you know that in some cases those loans can be refinanced to market rates if the property value is exceeded by the mortgage amount? We are finding that 2nds behind those loans will also often subordinate* (give you their permission to refinance the 1st mortgage). There are tools that you can use on the respective websites of Fannie and Freddie to see if you loan is owned by them. Just because you make a payment to Albatross Mortgage doesn’t mean it’s their money. They may just be servicing the loan, which is fancy way of saying they collect the money. It’s a little like a rental agency. They don’t own the properties, they just do the administrative work of maintaining the asset, collecting the payments, and distributing the funds to the owners and other parties as applicable. This behind the scenes stuff is what is known as the secondary market.
If your loan isn’t owned by Fannie or Freddie? Don’t give up! Check with me about strategies we might be able to use, and if I can’t help you I’ll probably suggest that you try to talk to the lender that does own the loan. I’ll have suggestions for that too. I’ll have more detail on what you might try in another issue, but the important thing to do is to realize that things are constantly changing. If things don’t work out right away, keep trying. Lenders are gradually figuring out what they need to do to prevent losses. What didn’t work a month ago may work next month.
Fine print? Yeah, there certainly are restrictions. You must be current on your mortgage, and the new borrowers in most cases must be the same os the old borrowers. Not all loan programs will be eligible. But just the same, it’s often an option for those who don’t want destroy their credit trying to get a better rate. LL