They are hard to find but the answer is YES. There is a home loan refinance program that can dramatically reduce the amount a homeowner owes on the balance of their home loan(s) – as long as the homeowner meets a few criteria discussed at the end of this article. This is NOT a loan modification that simply offers a temporary reduction in the interest rate and monthly payment. Using a Note Repurchase Program or Loan Balance Reduction Program, homeowners who find themselves owing more than their home is worth can literally shave up to hundreds of thousands of dollars off their existing loan(s) balance which results in a small instant equity position and a large monthly savings from lower mortgage payments. As if this wasn’t enough good news, the homeowners credit score is NOT negatively affected by this program.

Here is how it works. The company that is handling the Loan Balance Reduction, usually a team of lawyers and real estate professionals, will group a portfolio of existing notes of their clients from a particular lender, Bank ABC, and present the bank with an all-cash, take it or leave it, offer to purchase the entire portfolio of notes at a significant discount to current market value. If accepted, and I’ll explain why the banks are often willing to do this, the investor then turns around and underwrites a loan back to the original homeowner at 90% of CURRENT APPRAISED value. The homeowner has now repurchased their home for under present market value, saving a bunch of money from a lower mortgage amount AND monthly payment!

Now why would any bank in their right mind take so much less than what is owed to them? The answer is simple. Liquidity. Banks today need cash to lend (this is their business) and are required to have certain cash reserve levels by The Federal Reserve to stay in business. By removing a non-performing asset from their books it frees up cash that the bank can immediately turn around and use in their business activities. Rather than risk the increasing probability of having to foreclose and own these non-performing assets in a year or two, many banks are willing to take the immediate cash infusion.

Who qualifies for this program? In order to take advantage of this program a homeowner (including investment properties 1-4 units) must have a Loan-to-Value ratio of AT LEAST 125%. Meaning the total amount owed for all loans on the property must exceed the present value of the home by 25% or more. Secondly, the homeowner must have an income source and a debt-to-income ratio of 50% or less (based on the new lower mortgage payment!). The process takes approximately 2-3 months to complete and ALL credit quality qualifies, you can even be in the Notice of Default or Trustee Sale phase and be able to take advantage of this program.

If you meet the criteria listed above and would like more information about a Loan Balance Reduction Program, please visit me online at http://www.PrincipalReduction.us

Charlie Kartchner, Lic Broker, Principal Reduction Specialist http://www.PrincipalReduction.us
 
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When To Start Seeking A Mortgage For A New Purchase

You have made the decision to buy a home and start looking at properties. Before you get rolling, you should start trying to find the best mortgage option for your situation.

When To Start Seeking A Mortgage For A New Purchase

Most people begin shopping for a mortgage at the last minute and settle for the first offer they get. This is an absolutely terrible thing to do. A house is one of the most important things you will ever be able to own and getting a mortgage on that house, or, more correctly, getting the best mortgage possible on that house is only too important. The only way you will be able to find that perfect mortgage is to shop around.

Obviously, this means that you should begin looking as soon as possible. Don’t wait until the last minute to search for mortgage options, rather leave yourself as much time as possible to go through as many lenders as you can and see what each has to offer. Every lender is different and will provide different plans with different rates and different things tied to those mortgage plans. You need time to go through all of these different offers and sort out the good from the bad. If you don’t have perfect credit, use a mortgage broker to find the best deal. This is all they do, so they can give you a huge head start.

If you wait until the last minute to find a mortgage you will be forced to settle on one early and can end up costing yourself tens of thousands of dollars in the long run. One percentage point of interest might seem like a small amount, but when that one percentage point is used on a mortgage of hundreds of thousands of dollars based over 20 to 30 years, that one percentage point can end up equaling tens of thousands of dollars! That money is all interest that is being paid to the lender. You have better uses for your money, don’t allow a lender to take more from you than he has to. Shop around and find the lowest interest rate and best mortgage plan possible.

It is advised to begin shopping for a mortgage as soon as you decide that you might be interested in purchasing a home. You don’t have to get too serious, but check out the major banks and lenders that you know of to start with. Lay some groundwork and get some feedback. Start making some goals of how much you will need and what sort of interest rate you want. It is highly advisable to get pre-approved for a loan if at all possible. Keep these things in mind and shop around to find the best plan possible.