Top Reasons for Mortgage Hardship

Home owners can be facing hardship in making their mortgage payments for multiple reasons. We presenting here a few of them to assist those who may be looking for a short payoff or a loan modification from from their lender(s).

1. Income reduction or loss.
Examples are: unemployment, underemployment, reduced work hours, reduced pay (wage, overtime, bonus cuts), or decline in self-employment earnings, child support payments, social security and pension benefits.

2. Change in financial circumstances.
Examples are: death in the family, serious or chronic illnesses, permanent or short-term disability, increased family responsibilities,(birth or adoption, caring for elderly relatives or other family members).

3. Increase in expenses.
Examples: mortgage payment has or will increase due to interest rates resetting (ARM), high medical and health care insurance costs, uninsured losses (accidents, fires or natural disasters, unexpected high utility bills, increased property taxes, condo assessment or homeowners' insurance.

4. Insufficient cash reserves.
Examples: there is not enough money to sustain the mortgage payment and cover BASIC living expenses at the same time with the existing loan balance and terms.

5. Excessive debt payments.
Examples: using credit cards, home equity, retirement accounts in order to make mortgage payments.

6. Grossly overvalued property.
The decline in the value of the property prevents one from refinancing or selling. Not having a Fannie Mae, Freddie Mac or FHA insured mortgage making one ineligible for government rescue programs such as Making Home Affordable (MHA). The lack of other alternative to refinance. Not wanting to move while the neighborhood is turning into a ghost town. Not wanting to walk away from one's obligations yet making the sacrifices. Facing high interest rates.

7. Ability to get refinanced by another lender.
By showing that one is credit worthy in the face of so much adversity, one deserves a chance to reset the clock by getting a new and affordable mortgage. This leads to home retention, and minimizes the loss that the lender could face if the homeowner defaulted through foreclosure or abandonment.
This list is by no mean a complete compilation of the many reasons that explain why a short payoff would be a better alternative to foreclosure.

Short payoff refinance offer the well qualified homeowner who is facing the hard choices brought by a declining real estate market. By refinancing with a short or discounted payoff, both the lender and the borrower win. Litigation and carrying costs are simply avoided while disruption and despair vanish.

For more information about this and other mortgage related issues, call 773-451-5547 and ask for John Palla, Sr. Mortgage Banker.