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Old 07-15-2014, 09:00 AM
 
Location: Raleigh NC
5,284 posts, read 4,575,590 times
Reputation: 13277

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I've recently become underemployed, making about 40% less than I did when I got my mortgage. I'm also receiving less than I'm supposed to in child support. My mortgage payment is 2/3 of my salary (not counting child support, which essentially doubles my income) I'm stretching to make ends meet and have cut expenses to the bone. This month I had to borrow from my home equity and it looks like I'll be doing that for a while.

I don't think I can refinance, because my income is so much lower, why would they approve me for a new loan?

Yesterday I found out about a program in our state called Foreclosure Prevention. Basically they lend you the money to keep up your payments, interest free, then you pay them back when you sell the home.

I'm also looking at loan modification with my lender. It says modifications to the loan are permanent. I don't really get how this is much different than refinancing. If/when my income bounces back up, I would certainly want to be applying more to my principal balance.

Do any of these options have a negative impact on my credit score?

Are there unforseen ramifications I'm not considering here?
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Old 07-15-2014, 09:10 AM
 
Location: NC
6,081 posts, read 7,047,947 times
Reputation: 12054
Give this a read.

Loan Modification Frequently Asked Questions - HUD
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Old 07-15-2014, 09:25 AM
 
Location: Southern California
4,350 posts, read 4,942,333 times
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A modification is done only by your current lender. It will go on your credit report and affect the ability to refinance, get a mortgage in the future. You do what you need to do.

A refinance is based on a difference set of qualifications and and can be done through other lenders.

What ever route you take, even if it is BK, short sale, you want to stay current on your mortgage and not get late payments reported.
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Old 07-15-2014, 11:02 AM
 
Location: Raleigh NC
5,284 posts, read 4,575,590 times
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Just talked to my current lender. Nice gal said my credit score is 807 and practically BEGGED me not to do modification.

I calculated refinancing. Unfortunately, it would cost about $2000 in closing costs and save me about $2000 in the first year. So that doesn't seem like it makes much sense. (My current interest rate is 4.7%)

I took a long hard look at my mortgage. I'm paying twice as much per month to the interest as I am to the principal. It makes me want to throw up. Still can't feel like this was a good investment. Hope to sell the house or rent it out in 4 years when youngest graduates from HS.
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Old 07-15-2014, 06:54 PM
 
Location: Southern California
4,350 posts, read 4,942,333 times
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Quote:
Originally Posted by Stagemomma View Post
I don't think I can refinance, because my income is so much lower, why would they approve me for a new loan?
You need to work with a lender to see if you can refinance, there is too much required information that you can't just put on the internet or even by phone. Paying $2000 now to save $2000 this year, and next year and next year, seems like a good deal, but reality is, unless you interest rate drops a bunch, you are just saving money today to pay out more in the long run. It might be time to sell and rent if you can't afford the mortgage and principal every month. But if it is an investment you really have to define what is it's return.
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Old 07-27-2014, 11:32 PM
 
Location: Canada
5 posts, read 4,778 times
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A refinance is a new loan that you take out to pay off your old loan. A traditional refinance will require you to have equity in the property to request a new loan.It is similar to the process of when you received your original mortgage. Because this is a new loan, you will receive a new loan number and your new loan may have different terms than your old loan.

Loan modification is a temporary or permanent change of the terms of the current mortgage agreement that is usually requested to make the mortgage payments more affordable.
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Old 07-28-2014, 05:41 AM
 
Location: MID ATLANTIC
7,603 posts, read 17,648,062 times
Reputation: 8099
I am sorry to be blunt, but you must qualify for a modification, as well. Why would the lender proceed with a mod if it's just delaying the inevitable? Based on the information provided, the OP only has a couple choices: prepare to sell now (you don't have 4 years) or find a way to bring in more income. Whether the latter is by court for the ex, a new job, or a new roommate, you need to act now.
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Old 07-28-2014, 09:03 AM
 
4,546 posts, read 11,557,169 times
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"Yesterday I found out about a program in our state called Foreclosure Prevention. Basically they lend you the money to keep up your payments, interest free, then you pay them back when you sell the home."

Unless this is an actual state sanctioned program, I would be very careful about going this route.
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