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Most of you have heard the news from Obama as it relates to companies, and services that can help you with your home solution in this current economy. Chances are you took out a mortgage, or home loan a few years ago with your bank and now you are afraid that you may have bad credit, or owe too much on your house, now that housing prices have gone down.
Federal laws have come out with some great loan modification programs, and now you are hearing about, and you are wondering how to make sense of all of this and what are the qualifications.

Most loan modification programs will not allow for a principle reduction. If you are looking for an upside down mortgage solution, then a short-refi may be better for you. My research shows that GMAC, Wells Fargo and Countrywide are widely searched as it relates to lenders. If you want to sell instead of stay in your house, a short sale may be a better solution.

The short refinance process usually takes 120 days or less to complete. This is not like
your standard refinance process on your mortgage. The lenders have to take what’s called a short payoff, or short pay refinance, it’s a unique program, just now becoming popular. With the short pay of the mortgage you’ll want to check with your tax accountant, it’s likely that the lender and IRS will deem this as a discharged debt, and you may owe taxes on it.
The company I am affiliated with will handle the negotiation. Typically a new bpo is ordered, this is a broker’s price opinion. This is done to ensure what the current market value is of the property. The buyer gets qualifying for the new loan amount with the current lender or a new lender through FHA. Through the FHA, homeowners are able to qualify for low fixed interest rates and high LTV (loan-to-value ratios on their mortgages)

The homeowner must be able to afford the new loan and qualify showing:
tax returns, w-2’s, 1099’s, check stubs and bank statements, a full documentation loan. The current program is for those not yet in foreclosure. If foreclosure has been filed already, contact us and we’ll look at the loan modification or short sale solution for you. The costs to the seller are only around $224 upfront. You keep ownership of the property the whole time and stay in your house. You don’t have to be behind in payments like most loan modifications. Prior credit histories such as bankruptcy and foreclosure don’t matter. Debt to income can be as high as 45% when qualifying.

Documents you’ll soon need for qualifying:
(Info needed for anyone to be put on the loan)
-Last 2 years of W-2’s
-Last 2 years of tax returns
-Check stubs for the past 30 days
-Bank statements covering the past 60 days-all pages from the statement
-Most recent statement(s) for investment accounts: IRA’s, CDs, Money Market accounts, Pensions
-Your mortgage statement(s)
-A copy of your homeowners insurance policy
-Copies of your ID and Social Security Card

You are in your current home right now and you are deciding what to do, you are looking at all of your options:
There is 1 decision you MUST consider as the first step:
Are you staying in your house, or leaving your house?

Let’s go one step further…
Do you want to stay, or are you being forced to leave your house.
We understand why you want to stay, you have money in the house, your kids grew up in the house, they are in the
school system, and many other reasons.
Let’s look at the reasons that you are being forced to leave your house:
A: Your payment is adjusting upward and you can’t afford it
B: You, a spouse, significant other or family member have lost their job
C: You have had some health problems and set backs
D: You have far too much debt or credit card debt
E: You are near bankruptcy
F: The house needs too much fix up, or maintenance and you can’t afford it
G: Their has been a death in the family, and costs are incurred
As we’ve discussed above there are a lot of reasons why you must leave a house.

Below I am going to discuss all of the major options for leaving your house and staying in your house,
Then I am actually only go into detail on Short Sale, Loan Modification and Short-Refinance.

Now that you as the homeowner know your options, let me discuss: Short Sales, Loan Modifications, and Short-Refinance

Deciding amongst the 3 options above come down to this:
Staying = Loan Modifications and Short-Refinances
Leaving/Selling=Short Sale

Principle Reduction (Discharged Debt) *Possible tax benefits until 2012 see Mortgage Debt Relief Act of 2007 IRS.gov
Short Sales reduce the principle balance so that you can sell
Short-Refinances reduce the principle balance so that you can adjust for a new lesser loan amount
Loan Modifications as a general rule will not offer the principle balance, even upon success, you may miss the 2012 deadline above

Timelines
The timeline you are at in the process may determine which option you need to go with:
0 payments behind-Generally a short-refinance is best, a short sale can be tough, but doable if it looks like you may fall behind
1-3 payments behind-Generally all 3 are a good option in this situation, just decide if you are staying or leaving, and principle reduction
Entered foreclosure-At this point loan modification and short sale are your two options decide if you are staying or leaving
After the sheriff sale-At this point short sale is your option, you have to come up with the full loan balance or sell on a short sale
After the sheriff sale-If your house sold for much less at the sheriff sale, then you could list the house for sale over that amount
4 months left in redemption-This is the minimum amount recommended to have time to negotiate and market your property
3 months or less in redemption-With little time left, a foreclosure extension may be your only option, please contact me

Money
Expensive-Most loan modification 3rd party companies want money upfront for doing loan modifications, sometimes in the thousands
Affordable- Short-refinances can be as little as $225. Short Sales are no cost, but selling may require assoc. dues, city inspections, both affordable.

Qualifying
Not Qualified-If you shouldn’t have been qualified originally or your circumstances may have changed you may not qualify for a loan mod or short-refinance
Qualified-If your credit/assets/money/job/debt ratio look strong on paper, then you may qualify for better rates and terms

Situation
Divorce may force you to sell
Probate or a death may force you to sell
Separation may force you to sell
Job transfer may force you to sell
Growing family may cause you to sell
Kids moving out may cause you to sell
Retirement may cause you to sell
Job loss may cause you to sell

As you can see much of the above is based on the factors that you decide, and the situations that decide for you.
Generally speaking when you try to qualify for a loan modification or a short-refinance, the qualifying will be like a home loan, but usually not as tough.
In all cases, short-refinance, loan modification and short sale, you have to prove to the lender your financial situation good or bad and why you
deserve to negotiate away your debt, or in the case of staying why you need better rates and terms. In all scenarios as you can imagine the lenders
will need to see paperwork and gather your financial information to see the full picture of why they will work with you. Below I have created a list
of what will be needed for all three. Please keep in mind that I used home loan qualifying steps for Short-refinance and loan modifications, whereas
they usually require a few less things, but could require a few different things.

Short Refinance Vs. Loan Modification