Real Life Loan Modification Triumphs

Due to the poor housing market and the deepening economic crisis, owners from across the country have been fighting hard to retain ownership of their loved home. Thanks to the concept of Loan Modification, troubled homeowners now have an option to overcome the bad patch.

Here are two real life cases where homeowners triumph over economic depression through the assistance of loan modification process.

Case #1

A homeowner who could not afford his monthly payments had his loan modified. His existing loan balance was $286,201. After getting the existing loan modified, $160 was added to the principal amount. Though there was an increase, this expense was nothing compared to his interest rate, which went down to 6% from a staggering 10% (that is a 4% reduction in interest rate) — and the good news is, whatever happens to the housing market in the future will not affect his new interest rate as it has fix monthly payments.  Because of this, his monthly payment went down to $1769 from previous $2551.

Today, his family does not have any arrangements on their new loan; no more notice of defaults and most importantly, no headaches. The best thing about this is that the family saves $782 per month; that is $9,504 in annual savings and $256,608 from the total loan.

In the following year, the family went to Europe on a vacation; thanks to the annual savings.

Take away points:

- Interest rate reduced by 4%.

- Monthly payment reduced by $782.

- Yearly savings increased by $9,504.

Case #2

A homeowner had a balance of $339,246 from their existing loan. He was 5 months behind payments which totaled $12,214 of arrearages.  He short term financed $7500 of the arrearages which allowed him to stay in the own home even if they did not have the money to make up for the late mortgage payments. To save the home, which will eventually and inevitably be sold in short sale or worst, foreclosed – he applied for a loan modification.

By applying for a loan modification, he decreased the interest rate by 2.5% — from 8.5% to 6%.  His monthly payments went down from $2443 to a more affordable $2113.  He now saves $330 per month, $3,960 annually and will save $102,960 on the entire loan. No more months behind and no more notice of defaults. And the best thing is that they still own their home up to this day!

He plans to send his daughter to York University now which he never thought possible; thanks to loan modification.

Take away points:

- Interest rate reduced by 2.5%.

- Monthly payment reduced by $330.

- Yearly savings increased by $3,960.

- No more notice of defaults.