Housing Market Crisis by Oswin Grant

Housing Crisis Solution
The housing crisis that has became a huge problem in the last few years is affecting just about every part of the country. The problem started with the sub-prime market meltdown.
Even though most of the predatory lending has ceased, there are many home owners that are feeling the sub-prime melt down and the effects of it. The market will always correct itself in time. However our economy is in turmoil due to the whole sub-prime lending primarily from 2005 and 2006. Some of the states greatly affected by it are Florida, California, Arizona, and New York.
Many home owners started out with low teaser rates on their adjustable mortgages with the first few years at an attractive rate, and when that time had passed the reality of the new higher mortgage began to set in. Now some home owners are seeing their mortgages almost double in a few short year. Burrowers took on these low rates to start out with a comfortable payment hoping to get into a higher paying job or just to get some appreciation in their homes. When that does not happen then there is real trouble making the new larger house payments. The blame can not be only be placed on the predatory lender but also on individuals taking out loans they know they can not afford.
Government has been trying to give a helping hand with the 700 billion dollar bail out plan, but their efforts might not be as helpful the to average home owners as it is to the big financial institutions that the funds might be primarily allocated to. Most resident need help and they need it now.
The best ways to try to save home owners is to talk to the actual bank, mortgage companies, or their loan servicers. For the average home owner that is in imminent danger, he/she should contact their lenders as soon as possible. Many lender are willing to work with home owners that are in serious jeopardy of defaulting on their loan. There are many programs that can be worked out to try to avoid foreclosure.
The main thing that are being offered currently are Loan modification, short sale, deed in lieu of foreclosure, principal forgiveness(even though less common):
Loan modification is generally restructuring the loan to lower the monthly payments. Generally this is a viable solution and it's common right now. The total amount past due can be rolled up into the principal balance bringing you current and lowering the monthly payments.
Short sale is selling the property to prevent foreclosure. Your lender has to approve you for this option and you get a realtor to find a buyer. Your realtor submits your prospective buyers offers to your lending and they review your offers for approvals.
Deed in lieu of foreclosure is the lender taking back the property therefore relieving you of the financial burden. These are mostly buyers with some equity in the property that ensures when the property is auctioned off they can re-coup any possible losses.
Principal forgiveness is lowering the total principal on one or more loan in the case of a 80/20 loan. Lender might be able to lower total due on one or both loan, therefore lowering the total monthly payment.
The first thing to do is to call up your lender to see what options are available before your find your self in foreclosure. Do not wait once you have figured out that there might be serious paying your mortgage in the near future.
Mortgage Refinancing Information
Mortgage refinancing can be a wise decision. Refinancing means taking out a new mortgage loan, to pay off the original mortgage. Homeowners do this for several reasons. One reason is that they want to change the terms of their mortgage. Perhaps, your current loan is an adjustable rate mortgage (ARM), meaning the interest rate varies based on market conditions. In some cases, this can cause your rate and payments to rise dramatically, uncomfortably stretching your ability to repay the loan. By mortgage refinancing into a fixed rate loan, you can lock in an interest rate that will never change during the life of the mortgage. This will create a monthly payment amount that is not only predictable, but hopefully more affordable as well.
Another reason you might consider mortgage refinancing is to change the length of your loan. Assuming you can make the higher monthly payments, refinancing into a shorter term, like a 15-year mortgage, could end up saving you thousands of dollars in interest over the duration of your loan.
You could also refinance in order to take advantage of your home's equity. By mortgage refinancing with a loan large enough to both pay off the original mortgage and pull cash out to use for other projects, like home remodels, college tuition, or new business ventures.
However, there are a few things to consider before mortgage refinancing. There will be closing costs and fees associated with the new loan, and these fees can add up to a couple thousand dollars. In addition, you may have to pay for a current appraisal of your house, and other necessary requirements.
If you are unhappy with the terms and conditions of your existing loan, mortgage refinancing may be the right solution for your home loan needs.
Modification In/Outs
When applying for a loan modification having the right information can easily mean that you are modified easily and you do not end up getting declined. For example: When a mortgage company ask for your financial information they what to see what your personal finance currently are. They want your income and your expenses to be pretty similar; Contrary to what some home owners think, having too much debt and having that as the primary reason why you should be granted a loan modification or principal reduction in most cases isn't good enough reasons to extend payment reduction. Think about it. If a homeowner is already buried in debt already why would lowering your mortgage a few hundred dollars a month on average make much of a difference in your financial situation. You might still end up back in the same situation where you were before the payment reduction. It is much better for you to be just a bit under or over extended on your income vs your obligations.
For example, you look more promising to a mortgage company for a loan reduction having $8,000 as income and $8,000 as bill monthly, than you do having $8,000 as income and $10,000 as bills monthly. Simarily , if your income is $10,000 a month and your expenses are $5,000 you might not be the best candidate for a mortgage reduction. You don't want to appear to over extended or too under obligated either, balance is the key. So any bills that are adjustable or bills with a minimum payment might be used in your financials as to not appear too over extended.
Like wise if you are making twice as much as your bills why should your mortgage payments be lowered when you obviously can easily afford your bills when there are homeowners out there that are in a more serious situation who really need help.
There are other factors too such as property value. If you are in an area where the property value is way down you might not be a prime candidate for a loan modification also. Sometimes you might not have a whole lot of control over being accepted and approve for a loan modification; Regardless there are ways to improve your odds of being accepted.
Anyone seeking help with getting professional advise for their own personal mortgage situation can contact me for help. I know the ins and outs of the mortgage industry, and have answers for alot of the mortgage problems we are currently facing. I can give solid advise on how to stand a better chance of actually getting your mortgage loan modified and lowered. I can also give advise on short sales, Deed-in-lieu of foreclosures and principal reductions and discuss which option might be best for you based on your situation. This kind of informations usually cost thousands, currently at no cost to you.
About the Author
I have been blogging now for about a year, I really enjoy writing and sharing any helpful information that I have with anyone interested.