Real Estate


Good Afternoon!

Last week we talked Rent Relief. This week let’s talk Mortgage Relief.

So, as we do, let’s talk Real Estate, let’s talk MORTGAGE RELIEF OPTIONS…

This Pandemic has brought on hardships for many. One of the biggest expenses people typically have is housing. Lender’s are working with homeowners to help reduce people’s mortgage payments and keep them in their homes. Two long term ways to lower your monthly mortgage payments are through loan modifications or refinancing. They both typically do the same thing, allow you to pull some cash out and take on a lower monthly payment, BUT they have different audiences and can affect your credit report differently. 

Loan Modifications
A loan modification is exactly how it sounds – a modification to your current loan with your current lender. Often times, loan modifications are considered if you are at risk of foreclosure or are underwater on a loan. Different from refinancing, loan modifications don’t typically require a minimum credit score or income to qualify, however, they might show up as a negative event on your credit report. 

When you refinance, you essentially replace your current loan with a brand new one. You receive a new interest rate, you can take cash out, etc but you have to go through the application process again entirely. This means your current income and current credit score matter. In times where interest rates are low, you can  potentially save a ton of money by refinancing and taking on the lower rate for the new life of the loan. Keep in mind though, you need to make sure this new interest rate is in fact “worth it” over the life of the loan, because closing costs on these bad boys range 2%-5% of the total loan amount. 

I want to note that both Loan Modifications and Refinancing can be used even if you are NOT in financial hardship, but today I am focusing in them as a means to help seek mortgage relief, given the current climate.
A loan modification may be the best route if you have missed payments or lost income in this Pandemic.
If your income has remained stable, and you just want to take advantage of the low interest rates we are currently seeing, refinancing may make more sense for you.

**Please note I am not a mortgage expert. This article is meant to educate others, based on the education I am currently doing on the industry. You should seek guidance from a licensed mortgage broker or banker for all of your lending needs.**

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