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Old 08-31-2010, 12:03 PM
 
184 posts, read 268,924 times
Reputation: 48

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Guys

I'm in the process of getting a loan modification on my currently occupied house?
My question is,

If i get the modification on this house, would i be able to put this on rent and buy second house? not right away but in few years?

thanks
sullah
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Old 08-31-2010, 01:16 PM
 
Location: Austin
4,453 posts, read 8,405,069 times
Reputation: 3595
It will depend on whether or not you stay current with your payments and what your credit score ends up doing, all which is controlled by you.
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Old 08-31-2010, 02:49 PM
 
Location: New York
1,118 posts, read 2,189,223 times
Reputation: 741
Quote:
Originally Posted by sullah View Post
Guys

I'm in the process of getting a loan modification on my currently occupied house?
My question is,

If i get the modification on this house, would i be able to put this on rent and buy second house? not right away but in few years?

thanks
sullah
I want to point out every modification is different. You do not provide enough information to thoroughly discuss your situation.

When I speak with homeowners in "default is imminent" situations, these people are looking to seize any information that will help them. The first thing I have them do is draw three boxes on paper. The first box is the mortgage, the second box is their bills, and the third box is their credit. In that order work on a plan to turn their lives around.

Loan modifications are meant for people facing a provable hardship. If you show your lender you have means to pay primary or another mortgage, it will effect any type of payment reduction if not outright get you denied.

Your credit has nothing to do with a modification - the two main points are your income and the mortgage payment. When applying for a new loan, then your credit is looked at.

If your payment is above 31% of your gross monthly income, you have something to negotiate with. If the mortgage payment is below 31%, the mortgage is not the cause of the hardship.

When it comes to negotiating - if the value is upside down the cards are stacked in the homeowners favor. On the other hand if there is equity, the cards are in the favor of the Lender.

You are showing this as your primary home and you need to show enough income to support your loan. You can show rental income, if for example you rented a room out.

Our Firm has complete over 2400 modifications in the last year - what I am seeing on primary homes, interest rates originally below 7% are going in to 5 year payment reductions. On rates above 7%, are getting lower rates fixed for the life of the loan.

The best completed mod I have seen has been 2.89% fixed for the life of the loan. Not all modifications will result in a payment reduction, the goal is to get the homeowner into a better situation. Just had a call this morning he was questioning why his payment was increasing. Originally 3.35% interest only loan. 4 months behind. Just got his trial payment at 3.99% P/I. He was unhappy why the payment was going up, but the new loan will benefit him because each month he is paying towards principle.

You should wait until your modification is completed, before you making plans to get involved with another property.




My $00.0002

.

Last edited by Modification Specialist; 08-31-2010 at 03:16 PM..
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Old 08-31-2010, 03:44 PM
 
184 posts, read 268,924 times
Reputation: 48
I'm current on my payments and my credit score is excellent. I know FHA-Loan modification requires you to be in your primary house. I'm curious what happens if i put on rent and buy another house?

Thanks
sullah
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Old 08-31-2010, 03:58 PM
 
184 posts, read 268,924 times
Reputation: 48
Thanks for the great info, I'm not doing untill i get loan modified . I just wanted to know if i my loan modification get accepted and i can purchase a new home without doing any fraud.
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Old 09-01-2010, 09:29 AM
 
3,353 posts, read 7,492,981 times
Reputation: 1406
Quote:
Originally Posted by sullah View Post
Guys

I'm in the process of getting a loan modification on my currently occupied house?
My question is,

If i get the modification on this house, would i be able to put this on rent and buy second house? not right away but in few years?

thanks
sullah
So you can't meet your obligation on your current house and asking for a loan modification. You then want to buy another house and become a landlord. You need to put your focus on getting your financial house in order before you consider buying more.

To answer your question, after your modification you will not qualify for a new loan for a few years as you will have a mortgage on your credit report that was not 'paid as agreed'.
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Old 09-01-2010, 02:03 PM
 
Location: New York
1,118 posts, read 2,189,223 times
Reputation: 741
Quote:
Originally Posted by TimtheGuy View Post
So you can't meet your obligation on your current house and asking for a loan modification. You then want to buy another house and become a landlord. You need to put your focus on getting your financial house in order before you consider buying more.

To answer your question, after your modification you will not qualify for a new loan for a few years as you will have a mortgage on your credit report that was not 'paid as agreed'.

Well said Tim....

sullah - in these forums there are so many people lacking common sense. Your first statement concerned me a little. Answering your question about a loan modification and purchasing a new home. In a couple of years I see no problem with that.

Understand when a person buys an investment property, the interest rate is higher because there is more risk. Compared to when a people buys a home to live in receiving a lower interest, there is less risk.

After there is a history of on time payments, the Lender's risk level lowers at no benefit to you. Over the last decade I have spoken to 100's of people that kept their first home, renting it creating a 2nd income and moving into another home. What you are thinking of doing, you are not the first to think this way.

Actually - most Lenders have a trial period which is considered mortgage probation, a home owner cannot miss any payments in that period. If they do, the Lender can immediately start the foreclosure process without going through the courts. Even due to the fact a state is a Judicial state, home owners no longer fall under that protection if they miss a payment in the period.

The period - it is different between lenders, the most I have seen has been 12 months.

One thing I have seen Lenders really "Screwing" homeowners (excuse me but no other word describes this). They lower the payment, leading the home owner to believe the new payment is what their loan was modified to. Then 6 months to a year later send them a demand statement for everything past due.

Another example with a lady in Georgia - over a year was sending in partial payments and financial documentation, to her Lender (BoA). Then one day the sheriff was knocking on her do to evict her. Her lender said she did not have the income to support her loan (her had 12mths of her bank statements so she could not contest it).

Finally sorry to bust your bubble - realize your Lender is not your friend. They are in business to make a lot of money off you over the life time of your loan. Going to them and asking for help (a reduction of money {profit} they are getting), when you are not in default of your payments. You are not giving any reason to your bank for them to lower your payments. Plain and simple, right now each month they are getting their money.

Again I do not know all the details of your situation, everything you have said based on my experience, you do not have a winning case for a modification....

..

Last edited by Modification Specialist; 09-01-2010 at 02:16 PM..
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