Do you want to get a home equity loan? There are options out there, and there are also some things to keep an eye out on, so in this article, we will look at the information you need to know to be able to get the best home equity loan for your needs.
The first thing to remember about home equity loans, is that there are many different options out there.
Are you in or facing foreclosure? Has the market value of your home decreased and you’re now upside down? These may be good opportunities to do a loan modification on your mortgage. A “loan mod” as it is sometimes called, is the process of changing the terms of your original mortgage with approval from the lender, and with new laws from the federal government, is not credit based. Losing your job, going from a two income family to a one income family (due to divorce or death of a spouse), being on an adjustable rate mortgage (ARM) where your payments have gone up due to the ARM, or the market value of your home has decreased and you are upside down; these are examples of permanent changes in your finances and may qualify you for a loan modification.
As forementioned, the process’ goal is to modify the original terms of a mortgage agreed upon by the borrower and lender, and may reduce interest rate, reduce monthly payment, modify the length of the loan, or reduce the amount of the mortgage, and many times will include any arrearage placed at the back of your loan. The process starts by you, the homeowner, calling the lender and requesting to do a loan modification.
Understanding the loan modification steps can mean the difference between being approved and getting rejected. In this short article, I’ll reveal the key steps necessary in understanding pre-qualification so after reading it you’ll be able to confidently move forward with an application.
Step 1: Calculate Debt/Income Ratio
Before you can qualify for a HAMP loan, you need to prove that your monthly mortgage repayment does not fall below 31% of your gross monthly income. This is important because the HAMP program was created to help out families with a heavy debt burden, i.e. a monthly commitment in excess of 31% of gross monthly income.