Going back to school -- loan modification? (interest rate, credit score, fees)

[nerak31]

So, I'm going back to school this fall and getting a PhD. Tuition is waived, and I have a small fellowship. I'm planning to continue working part-time at my current job. It's doable, but I may have to cut back my time to 25 or 30 hours a week, which will of course, affect my paycheck. This reduction in salary will make it tough for me to pay my mortgage, meaning the mortgage will eat up about 55% of my paycheck each month. Would a loan modification help, or are those only for people currently in trouble and I am "voluntarily" reducing my time at work. Do I have other options? Thanks...

[thegirlinaz]

I am bumping this topic up because I would like to see if anyone knows an answer to that.. I am curious..

[chet everett]

Big pay cuts scare the pants off lenders. I would guess your odds of getting the lender to OK any sort of modification is VERY slim.

What I would suggest is to perhaps attempt to refinance, BEFORE your pay goes down.
If you have an older loan / higher interest rate it MIGHT make sense to get a loan with smaller payments...

[TimtheGuy]

Not to attack the OP, but it is pretty sick that the whole country now thinks they should be able to get a loan modification.

[nerak31]

Yeah, I'm definitely thinking about refinancing, and I guess that's the better way to go. I've only been in the house for a year, and my rate is 5.625%, so I'm trying to figure out what the "break even" period is with another round of closing costs.

[Modification Specialist]

nerak let me tone in on your situation -

I can relate to your situation - I'm also attending school - taking a night class at a technical school two nights a week (4 hours each T/Th), plus starting in two weeks starting two classes at a university four days a week 8:00 to 12:00pm. I am cutting back my working hours.

I work doing modifications for an attorney firm, my hours are pretty much flexible, as well as working from home on my laptop. I do most of my work via the telephone, fax and email.

You should not look at a modification because you already have a low interest rate. The only way you would qualify for a modification, if you were behind on your payments. Maybe you could qualify for a program called Fresh Start at a lower interest rate.

I am not telling you to not pay your mortgage. Because you will do more damage to yourself than what you actually save.

Again - I am not telling you not to pay your mortgage, because this will also drop your credit score.

I use to do mortgages - when it comes to refinancing, figure about 5% total closing costs (this includes appraisal, title, banking, and other closing fees). This is an average across America to figure in closing costs. If your in Florida, it's slightly more. Colorado, Hawaii and Alaska much more......

Realistically since you are at 5.625% now - that's a pretty good rate. Reducing it down to 4.5%, how much would you really save?

Another thing is your value, I can bet your value has probably gone down since you brought your home last last. Which means you don't have enough equity to qualify for a lower rate.

The cost to do the refinance vs actually sending in one extra payment a year. I bet in the long run you would save more in interest by sending in extra.

One extra payment a year will knock about 7yrs of a 30yr mortgage. One extra payment on a 20yr, will reduce the term down to around 16yrs. Not to mention this gets reported to the credit bureaus as you are being more responsible, and your credit score shoots up.... I do that now, sending extra on my payments and have a 797 mid score.....

I think you should approach you situation from a different angle. Instead of trying to reduce your payment. Look at other streams of income.

Something that I did that made me alot of money, I invested a small amount in three different stocks. Bank/America (Bac), Citibank (C), and AIG. In two months I have had a 26% return on my money, plus it is still going up.

This week I paid cash for a new 2 car driveway and a new bathroom in our house.

Good Luck

My 2 cents........

[nerak31]

Thanks for your two cents and advice! Much appreciated..!

Originally Posted by Modification Specialist

nerak let me tone in on your situation -

I can relate to your situation - I'm also attending school - taking a night class at a technical school two nights a week (4 hours each T/Th), plus starting in two weeks starting two classes at a university four days a week 8:00 to 12:00pm. I am cutting back my working hours.

I work doing modifications for an attorney firm, my hours are pretty much flexible, as well as working from home on my laptop. I do most of my work via the telephone, fax and email.

You should not look at a modification because you already have a low interest rate. The only way you would qualify for a modification, if you were behind on your payments. Maybe you could qualify for a program called Fresh Start at a lower interest rate.

I am not telling you to not pay your mortgage. Because you will do more damage to yourself than what you actually save.

Again - I am not telling you not to pay your mortgage, because this will also drop your credit score.

I use to do mortgages - when it comes to refinancing, figure about 5% total closing costs (this includes appraisal, title, banking, and other closing fees). This is an average across America to figure in closing costs. If your in Florida, it's slightly more. Colorado, Hawaii and Alaska much more......

Realistically since you are at 5.625% now - that's a pretty good rate. Reducing it down to 4.5%, how much would you really save?

Another thing is your value, I can bet your value has probably gone down since you brought your home last last. Which means you don't have enough equity to qualify for a lower rate.

The cost to do the refinance vs actually sending in one extra payment a year. I bet in the long run you would save more in interest by sending in extra.

One extra payment a year will knock about 7yrs of a 30yr mortgage. One extra payment on a 20yr, will reduce the term down to around 16yrs. Not to mention this gets reported to the credit bureaus as you are being more responsible, and your credit score shoots up.... I do that now, sending extra on my payments and have a 797 mid score.....

I think you should approach you situation from a different angle. Instead of trying to reduce your payment. Look at other streams of income.

Something that I did that made me alot of money, I invested a small amount in three different stocks. Bank/America (Bac), Citibank (C), and AIG. In two months I have had a 26% return on my money, plus it is still going up.

This week I paid cash for a new 2 car driveway and a new bathroom in our house.

Good Luck

My 2 cents........