My boyfriend and I are looking to relocate from Chicago to San Diego as soon as possible. The new position will offer a 5% increase in salary to begin with and yearly raises in salary after that. The only problem is that my boyfriend owns a condo that he owes approx. $120,000 and is only worth about $80,000. We are considering doing a short sale to get rid of the property. My boyfriend is the only person that owns the home and his credit is what would be affected. He recently checked his FICO score which is 725. He is currently not late with any mortgage payments, or any payments for that matter. My questions are how will it realistically affect his credit and is the short sale our best option to rid ourselves of this house?
- Beth, Illinois
Here’s the downside of a short sale: Â Your credit rating will likely suffer. Â A short sale can take it down by 75 to 125 points. Â The bank will report the account closed to the credit bureaus as well as the fact that the loan was not paid in full. Â You can try to negotiate with the bank so that it will report a more positive scenario to the bureaus (this does happen) but make sure that you get it in writing. Â Why is this important? More…
A few days ago, I got an email from my friend, a mortgage trader, pointing me to this article from Bloomberg News. The article lays out some scary facts – essentially, people who are undergoing mortgage loan modifications through the President’s Making Home Affordable plan are seeing their credit scores fall – and in some cases, fall hard. One of the folks featured in the piece says his score lost 121 points. More…
I saw you on the Today Show and you brought up a loan modification. I looked this up on the Internet and everything I read said that you had to write a “hardship” letter in order to qualify for this process. We are not experiencing a hardship at this time but did want to see about lowering our current interest rate. My question is what is required for a loan modification?
-B., Alabama
If you’re looking for a lower interest rate on your loan, you can refinance or go through the loan modification process-which I warn you, can be a long and complicated one. The route you take will ultimately depend on your financial circumstances.
To determine which option is right for you, visit the government’s Making Home Affordable website. There you’ll find two separate questionnaires that will show you if you qualify for either refinancing or loan modification.
Let’s take a look at refinancing first. More…
A quick post: Am headed to Today this morning for a Money 911 segment. Yet again, we have questions (many, though we’ll answer one) from people feeling stuck — stranded — with mortgages they can’t afford despite the Making Home Affordable plan. They’re right for the plan:  Have Fannie Mae or Freddie Mac loans, not in excess of the $700,000+ cap, have been making their payments but are paying more (often way more) than 31% of their income toward the loan. They’re calling their servicers (that’s the 800-number on your statement) and they’re getting….absolutely nowhere.
If this describes you — and judging by the piece in the New York Times over the weekend that noted only tens of thousands (not hundreds of thousands or millions as expected) of loans had been modified and made affordable, you MUST keep trying. The banks, the lenders, were unprepared to deal with this in terms of the manpower they have on their sides. They are attempting to get through the paperwork they have on their desks. They are just swamped.
I am not excusing them. I am just telling YOU what is happening behind the scenes.  Call again today. Then again tomorrow. And while you’re at it, get a counselor from the Hope Now Alliance — call 1 (800) 225-5342 — to call with you and for you. And keep on trying.
On my post about the Making Home Affordable loan modifications, CMPIPE commented:  ”This site tells you if you may qualify, however, the mortgage lender can chose to not allow the modification – correct?”Â
Yes, that is correct. Â The site outlines the stipulations to make you eligible to apply for a loan modification from your lender; however, the program is voluntary and there is a chance your servicer isn’t participating (many are, though – and there are financial incentives for them to do so. Â You can find a frequently-updated list of servicers who have signed on here.) More…
Increasingly, I’ve been getting calls and emails from homeowners who aren’t yet behind on their mortgages, but think they will be soon. For a while – too long – lenders refused to talk to borrowers unless they were a few months behind. But President Obama’s Making Home Affordable plan should change things. More…
It all comes down to how you feel about debt.
Yesterday, I was a guest on Carmen Wong Ulrich’s CNBC Show On The Money.  Ric Edelman was there as well — he has a new book out — and the fabulous Tyler Mathieson (the publicist at Money magazine where we both once worked described him as “the light of our lives.”) More…
