Tuesday, March 23, 2010
3/23/2010 08:25:00 AM | Posted by
Arbor Mortgage
Many will argue that the biggest problem affecting mortgage lending today is declining property values. According to First American Core Logic’s Negative Equity report, more than 1 and 4 families are underwater on their mortgage; meaning that they owe more than the property is worth. Michigan is actually fourth in the nation with 38.5% of mortgages underwater. These are the same people that are struggling with today’s other problems; unemployment and underemployment. At a time when home owner’s need lower payments to survive, and the interest rates are actually low enough to make that happen, people think they will never get approved because their home value is diminished.
This is simply not true. Cue “short refinance”, with the glowing white light and “hallelujah” chorus. What is a “short refinance”? Much like a short sale, it’s when a bank or lending institution takes less than the full balance of the loan as payment in full. In the case of a refinance, they provide a payoff to the new lender for the lesser balance and they write off the difference.
Is it as simple as it sounds? Yes and no. Yes, it is as simple as asking for that payoff reduction. But, no, it is not quite as simple as just sitting back and waiting for the faxed payoff to show up. Your new loan officer will have to work hand in hand with you and your current lender to negotiate the payoff and it may take as little as 3 weeks, to as many as 3 months to actually hammer out a deal. This is where it’s important to work with a loan officer with experience in short negotiations, who is willing to spend the time and extra service to you.
Heath Haslam, Senior Loan Officer for Arbor Mortgage, says, “If you don’t ask, you don’t receive. Even if it sounds crazy, give it a try. I asked a major national lender to forgive $96,000 on a mortgage balance, and unbelievably, they said yes! That homeowner now has a payment that’s $1000 less than her previous loan.”
The other issue is that you still have to qualify for the new refinance in every other way. If your credit scores are too low, your outstanding consumer debt payments too high, or you’re currently behind on the mortgage, you likely won’t qualify for a new loan.
It’s time to put this in perspective, if your credit score is over 620, you can make your other payments on time, and you believe you’re “underwater” on your mortgage, it’s time to look into a short refinance. Start by contacting Arbor Mortgage at www.arbormortgage.com/contactus.
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About Me
- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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