I'VE JUST LOST MY JOB! CAN I RESTRUCTURE MY MORTGAGE?

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Lose Your Job?
How You Can Survive Your Mortgage with a Loan Restructure

If you have recently lost your job, you can join the millions of Americans who are now unemployed and looking for work. In March 2009, the federal government released figures showing that the unemployment rate in America is at 8.1%, which is the highest rate in 26 years. Though millions of Americans have lost their jobs, many are still fighting to keep their homes and meet their monthly mortgage obligation. Can a mortgage lender help a struggling homeowner during this economic crisis to help avoid foreclosure?

With so many homes being foreclosed, most mortgage lenders are willing to help their borrowers so that the lender can avoid having so many “real estate owned” properties on their hands. But you, the borrower, need to ask first. There are several options that lenders can offer their borrowers to help avoid default and subsequent foreclosure.

Interest Only

An easy option for a lender is agreeing to have the borrower make interest-only payments for a period of time. This option really only helps reduce your monthly payment if you have paid down your principal balance. A newer mortgage still has monthly amortized payments applied mostly to interest. However, if your balance is considerably less than when you first started paying the mortgage you, could save hundreds.

A Forbearance Agreement

Your lender may agree to forbearance, where you do not have to make your monthly payments for a limited time, usually three to six months. Interest on your loan still accrues and is applied to your principal balance, however. Know that a forbearance now to help with your current financial situation will probably extend your mortgage term on the back end by several months up to a year.

Full Modification

You could talk to your lender to make a permanent change in your loan payment with a loan modification. Options in a full modification could be a lower interest rate, extension on your loan term, or a combination of both. Know that you will be required to go through an underwriting process, including a home appraisal, before your lender can give you a decision on modification choices. You will need to provide proof of income that can meet your monthly mortgage obligation. If you’ve become unemployed recently, then this may not be an option for you, as the lender will have no way to document your income.

Taking Notes from Citibank

Since so many Americans have lost their jobs, many lenders could learn from Citigroup Inc. In March of 2009, Citigroup announced that they were providing help to homeowners suffering financially by lowering mortgage payments to qualified borrowers to around $500. In order to get this granted mortgage forbearance, a borrower must be two or more months behind on mortgage payments. During the forbearance, interest and penalties will be waived as well. This mortgage moratorium can potentially save thousands of homes from going through foreclosure while jobless homeowners get back on their feet.

Don’t be discouraged if you’ve recently lost a job. Though the consequential finances of a job loss can be stressful, know that there are options that your lender can take to help you keep your home and avoid foreclosure.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

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