Northern Virginia Home Sellers

Thinking Of Selling Your Home Because You Cant Afford It Anymore?

By Northern Virginia Real Estate Group Keller Williams Realty · on October 1st, 2009 ·

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You May Qualify For The Making Home Affordable Program

Many people in Northern Virginia are finding it more and more difficult to paying their mortgage. Unemployment is up, home prices have dropped, and find they owe more money to their lender than what they can sell it for. You find yourself not knowing what your best option might be.

Do you sell your home and see all of your equity disappear, perhaps your upside down and would have to bring money to the table in order to close. This is known as a “Short Sale” . What if you dont have the money to being to the table? Can you still have a “Short Sale“, or is a Foreclosure the only option you have? Perhaps you like your home and would like to continue living there, and could afford to if only your monthly mortgage payments were not so high.

Have You Thought About A Loan Modification? Many people do not even know that this is a viable option for them. Yet it could make the difference in whether or not you can continue living in your current home, and pay a much lower mortgage. The Obama Administration has implemented a Financial Stability Plan called “Making Home Affordable” This plan was implemented to help stabilize the housing market, and help homeowners stay in their homes. Best of all, there is no cost to you to apply. The First step is to find out if you are eligible to participate. There are Two Roads You can go down

Home Affordable Refinance:

Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage. Find out if you are Eligible

Loan Modification:

Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. Find out if you are Eligible

Who Services Your Loan?

The Servicer is the bank for which you have been sending your monthly mortgage payments to. This could be Chase, Bank Of America, WaMu, or any number of banks that offer home loans. Why do I being this up? In order to participate in this program, you have to work with your current bank.

What if I have a Second Mortgage?

The program is only designed to assist you with your primary mortgage. It will not effect nor changes the terms and conditions of the second mortgage.

Who Owns My Mortgage Loan?

If your mortgage loan is owned by Fannie Mae or Freddie Mac, you may be eligible for a Home Affordable Refinance to take advantage of lower interest rates. Only loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible. Your mortgage company can tell you who owns your loan, or you can contact Fannie Mae and Freddie Mac directly by clicking on the links below and completing the forms for each company.

Fannie Mae – 1800 7FANNIE – Fannie Mae Loan Look Up

Freddie Mac -1800 FREDDIE- Freddie Mac Loan Look Up

What If Neither Fannie Mae or Freddie Mac Own My Loan?

What if i find that neither Fannie Mae or Freddie Mac dont own my loan? Am I still eligible? The answer is yes, however you may need to find out exactly who owns it and call 1 888 995 HOPE

Are You Eligible? If so Contact Your Mortgage Servicer:

Once you have determined if you are eligible for a Home Affordable Refinance or Modification, the next step is to contact your mortgage servicer to discuss your situation. A wide array of servicers have agreed to participate in the Home Affordable Modification program and have already engaged borrowers and expanded capacity to begin the modification process for eligible homeowners. In addition, all servicers for loans owned by Fannie Mae and Freddie Mac are required to participate.The following is a list of servicers who have formalized their commitment to the program through a signed contract Click Here For A List

CHECKLIST

Here are some things you will need in order to complete a Loan Modification

Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.
Your most recent income tax return.
Information about your savings and other assets
Information about your first mortgage, such as your monthly mortgage statement.
Information about any second mortgage or home equity line of credit on the house.
Account balances and minimum monthly payments due on all of your credit cards.
Account balances and monthly payments on all your other debts such as student loans and car loans.
A completed Hardship Affidavit describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable

Payment Reduction Estimator

Under the Home Affordable Modification program, the target maximum amount for your mortgage payment (or mortgage debt-to-income) should be 31% of your gross (pre-tax) monthly income. This Payment Reduction Estimator will determine what your current mortgage debt-to-income is and how much your monthly payment may be reduced if you qualify for a modification.

Do not include any payments on your second mortgage. You may have taxes and interest in escrow added to your monthly payment already, so be careful to count taxes and escrow only once.

Payment Reduction Estimator – click here

Modification Evaluator:

Use this tool to determine if you may be eligible for the Home Affordable Modification. Simply enter your current monthly gross income. The tool will calculate a mortgage payment guideline amount. If your current mortgage payment is above this amount and you meet the other Home Affordable Modification guidelines, then you may be eligible Modification Evaluator - Click Here

Loan Modification Paperwork Example:

The following is an example of the forms needed for a Loan Modification with Chase. If Chase is your mortgage servicer, you can print these off and begin the process – click here

Forbearance:

Can I ask for Forbearance while I await the results? The Answer is that it will be up to your service provider to allow you to do so. This allows you permission to not pay your mortgage payment during this time. Please note however, that if you have a second mortgage, this only effects your first mortgage. It may be wise to continue paying your second mortgage or contacting them as well during this process.

What Can They Do For Me To Modify My Loan?

They can do a combination of things. They can appraise your home and reduce the mortgage amount based on what you owe and what the home is worth. They can also reduce your interest rate down to as low as 2%. The idea is to get your mortgage payment down to between 31% – 38% of your gross monthly income.

What If They Modify My Loan & I Still Cant Afford It?

You have gone through the process of filling out the forms and modifying your mortgage. However, due to your circumstances, to much credit card debt, loss of a job during the process, or whatever, you still cant afford to make your monthly mortgage payments. Perhaps due to your circumstances you were unable to qualify. You may want to consider a Short Sale at this time.

Short Sale Process:

The good news is that those forms you spent hours on putting together and sending to your mortgage servicer are still valid. These are the exact same forms you would need to fill out anyway in order for your mortgage provider to make a decision with regards to what they will allow you to price your home at in order to satisfy the lender. All you have to do is contact your Real Estate Agent, give him your information. Explain that you went through the loan modification process already and that you still need to conduct a short sale.

Your Agent should understand the Short Sale Process and contact the Lender to let them know they are representing you and be able to help in providing comps to the lender so that they can get an agreed upon price for which to list your home for. There is no need to haggle with the Real Estate Agent over commission rates as it will be the lender and NOT you that will end up paying both the Listing Agent & Buying Agent. This allows you to rest easy and just focusing on choosing the right Real Estate Agent that is well versed in Short Sales, so as to make this process run as smooth as it possibly can.

Will My Lender Still Want Me To Continue Making Payments?

Chances are they will. But Perhaps you cant due to financial constraints or loss of job. You can once again ask for forbearance while the Short Sale process is taking place. If they decide during this time not to work with you or begin the foreclosure process, you do have another option although it is in my opinion the last resort. Contact a Bankruptcy Lawyer and find out your options. This should stop the Foreclosure process at least temporarily. Again we highly suggest speaking with a bankruptcy attorney to learn your options. Many attorneys will allow you to come in for a free half hour consultation.

What if I Sell My Home During A Short Sale? Am I Responsible To Pay The Difference?

Again this all depends on the remaining difference, and your lender. You could find that you may be required to pay a percentage of the difference and given a time frame to pay it back. No one wants to continue paying on a loan for a home they dont live in. Again we highly suggest that you contact an Attorney that practices Real Estate Law, and or Bankruptcy.

Can I Ever Qualify For A New Home Even If I do A Short Sale, Have A Foreclosure, or File For Bankruptcy?

The answer is yes. Chances are a Short Sale, Foreclosure, or Bankruptcy, or yes, any combination of these will adversely affect your credit for years to come. The truth however is that you could be eligible within three years to qualify and get approved for a new mortgage provide your credit is worthy and you have enough money to qualify. Many people dont realize this is possible. It is hard to start over we know, but sometimes a fresh start is the best alternative.

If you have any questions regarding this article, or are considering a short sale in Northern Virginia give us a call to discuss your options. We would love the opportunity to assist you in this process and make your Short Sale go as smooth as possible. Call us at 703 637 0610 or email us

Northern Virginia Real Estate Group

Keller Williams Realty

Tags: foreclosure, loan modification, Northern Virginia Real Estate, Northern Virginia Real Estate Group, short sale

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Thinking Of Selling Your Home Because You Cant Afford It Anymore?

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