Loan Modification Glossary
25 October 2009
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You know what a mortgage is, how it works, and what to watch out for. But when you go asking for mortgage assistance, your lender’s words make about as much sense as alien banter. That’s what makes the Loan Modification process so confusing for many homeowners–and why many of them simply give up.
But you don’t have to be a financial expert to make sound decisions. A working knowledge of the lending and loan modification industry can help you better understand your situation, and know exactly what your lenders mean. Below is a list of terms you’re likely encounter in a loan modification, and what they mean for you.
Amortization: The repayment of a loan (usually a mortgage) through regular installments. The payments are determined by the term of the loan, the principal balance, and the interest rate.
Annual Percentage Rate (APR): The total cost of the loan, including the interest, mortgage insurance, points, and other associated fees.
Adjustable-Rate Mortgage (ARM): A type of mortgage in which the interest rate changes according to market conditions. This means your payments may increase or decrease from month to month. Most ARMs have a payment cap that keeps the amount from rising beyond certain levels.
Debt-to-income ratio (DTI): The ratio of the amount you pay on the loan to your total income. Lenders use this to determine whether or not you can comfortably pay the loan. According to the Federal Housing Administration (FHA), the mortgage payments should not exceed 29% of your monthly income before taxes, and your total debt (including credit cards and other loans) should not go over 41%.
Deed-in-lieu: A deed that passes interest in your property to your lender as settlement for your debt. It doesn’t let you keep your home, but it helps you avoid the foreclosure proceedings and associated costs.
Equity: The amount of financial interest you have in your own property. This is calculated by subtracting the amount you still owe from your home’s fair market value.
Fair market value (FMV): A theoretical price given to your home considering the current market conditions. The FMV assumes that the buyer and seller are acting freely and have all the pertinent information for the deal.
Fixed-rate mortgage: A type of mortgage that uses a fixed interest rate throughout the term of the loan. This gives you more stability as a borrower, as your payments will remain the same regardless of the market figures.
Foreclosure: A process wherein your property is sold off and the proceeds go to your lender, allowing them to recover their losses when you default on the loan.
Forbearance: An agreement in which your lender revises your payment plan to help you get current and avoid foreclosure. This may involve lowering your monthly payments or suspending them for a given period. Unlike loan modification, this is usually temporary and is often used as a loss mitigation option.
Good faith estimate (GFE): An estimate of the total cost of the loan, including all the closing fees, lender charges, and insurance costs. All lenders are required to give you a GFE within three days after you apply for a loan.
Interest: A percentage of the principal added to your monthly fees, as a way of paying your lender for the use of money.
Interest Only: A loan structure in which you only pay interest for the life of the loan, and pay the principal only after a given period.
Lien: A claim held by your lender against your property as a form of security in case you default on the loan.
Loan-to-value ratio (LTV): The ratio of the total amount you pay on the loan to the actual price of your home. The higher the LTV, the less you have to put out as down payment.
Loss mitigation: A process that helps borrowers to avoid foreclosure and lenders to minimize their losses on delinquent borrowers. When you fall behind or apply for a loan modification, your lender’s Loss Mitigation office will handle your case and make the decisions.
Mortgage banker: A firm that resells loans to secondary lenders, such as Fannie Mae and Freddie Mac.
Mortgage broker: A person or company that serves as a mediator between agents, buyers, sellers, and mortgage lenders. Brokers are paid by a percentage of the amount earned by the lender or seller. Lenders are required by law to disclose all fees paid to brokers and other parties, so you can be sure they’re not making kickbacks at your expense.
Mortgage insurance: An insurance policy that helps minimize losses for your lender in case you fail to keep up with payments. This is usually required for borrowers who make a down payment lower than 20% of the purchase price.
Principal Balance Reduction: A type of loan modification in which your lender reduces your principal balance to lower your monthly payments. Lenders usually grant this only to people from heavily depreciated areas, or when the amount they write off is still lower than the cost of foreclosing on your home.
Refinancing: A process wherein you take out one loan to pay off another. This allows you to enjoy better loan terms, such as a lower interest rate or a more stable structure.
RESPA: Real Estate Settlement Procedures Act. This is a law that requires all lenders to give you a Good Faith Estimate (GFE) of the loan and disclose all the fees involved. It also gives you the right to dispute any fees or even cancel the loan within a reasonable time frame.
Short sale: A common alternative to foreclosure. In a short sale, you sell the home for less than its fair market value, and give the proceeds to your lender as payment for the home. Although it won’t let you keep your home, it’s less damaging to your credit than a foreclosure.
Teaser Rate: An introductory interest rate offered on many mortgages to draw in borrowers. After the introductory period, the interest reverts to normal rates, increasing your monthly payments for the rest of the loan.
Teaser Rate: A temporary rate reduction at the inset of a loan.
TILA: Truth in Lending Act, also known as the National Consumer Credit Protection Act. This law requires lenders to give you complete information about the terms and total cost of the loan.
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read excerpt here: representativepress.blogspot.com Link to the book: www.amazon.com Noam Chomsky’s book Hegemony or Survival Chavez Cites Chomsky at UN General Assembly Almost all MSM avoided reporting Chavez’s Chomsky book recommendation. Madame President, excellencies, heads of state, heads of government, high representatives of the governments of the world, good morning to all of you. First of all, I would like to invite you, very respectfully, to those who have not read this book, to …
Help answer the question
Student loans have to start being paid off 6 months after you graduate. What if you continue to law school?
I'm planning on going to law school after I graduate from a 4-year college. I'm just wondering if I'll have to start paying back my student loans after 4-year college, or after I graduate from law school?
P.S. I'm just doing some preliminary checks on student loans in general, I'm a senior in high school and I'm just thinking ahead.
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When your federal educational loans are in default, you have several options:
You can repay the loan in full.
You can negotiate a new payment plan with your lender.
You can "rehabilitate" your loan.
You can consolidate your loan.
Obviously option one is rarely attractive or possible for defaulted borrowers.
Option two (renegotiate) should be investigated fully – most borrowers skip this step, but it's probably the best option for most people. Call your lender and ask to speak to someone in the "Workout" Department. Explain your situation to them (there's nothing unusual about it) and ask what options are available to you for switching to a graduated, extended or income-sensitive repayment plan. If your lender will agree to change your repayment plan, a few regular payments will get your default status removed, and the new plan may be easier for you to keep up with.
Option three (rehabilitation) is really a specific form of a workout agreement. It probably won't help you much in your situation, because it requires an agreement between you and the lender that will allow you to make 9 consecutive on-time payments of some agreed-upon amount.
Option four is everyone's favorite, but you must absolutely understand what a consolidation loan will do. To keep this utterly simple – a consolidation loan is a brand new loan that will pay off your old, defaulted loan. A consolidation loan MAY lower your monthly payments, but understand how this works. A consolidation loan never lowers your payments by wiping away some of your debt – a consolidation loan lowers your payments by stretching out the length of your loan. If you pay less every month, you'll make many additional monthly payments, and – in the end – you'll pay far more back than you would have paid on the original loan.
As an example: Suppose I lent you $100 and you agreed to pay me back in 2 weeks by paying me $50 a week. You came back a few days later and explained that you weren't going to be able to afford to pay me $50 – is there something else we could do? "Oh, absolutely," I'd say, gallantly. "Instead of paying me $50 a week for 2 weeks, how about if you only pay me $10 a week for 17 weeks?"
See – in the end, you'll pay me back $170 instead of $100 – that's how a consolidation loan works. But remember – we're not talking a $100 loan for a couple of weeks – by the time you pay that $5000 loan of yours back over many years, you'll pay a few thousand more than you might have paid if you didn't consolidate that loan.
I've attached some information about consolidating from the Department of Education – take a few minutes to read it over. If you do choose to go this route, be sure to consolidate with a reputable lender (or directly with the government) and not with some fly-by-night operation that you learn about from some pay-per-click site shilled on Yahoo! Answers.
Good luck to you!
only if their credit allows it, if they are not capable of taking on your loan on top of what they're already paying, then most banks wouldn't allow it.
With 20 years experience in the mortgage business, I have never seen a student loan that was in repayment treated any differently than any other long term debt. While you may be able to ask for a hardship deferal in the future, which is the only advantage on a student loan that doesn't exist on a standard installment loan, no lender wants to anticipate that circumstance. As long as the payments extend past 10 months in the future, the lender will only use your monthly payment as part of your qualifying ratios. The total debt is not that important and would only be a minor factor. What will matter more is your payment history on the student loan: it should be perfect. It all comes down to the quality of your credit history (your FICO score) and your qualifying ratios of debt/income.
Try this site
http://free-college-information-usa.blogspot.com/
Free College information on financial aid for students, scholarship, student loans and more.
Noam Chomsky is the man!!
He is a bullshit artist who is nothing but a dictator who will fall in a matter of time…He is a puppet like most politicians !!!
Bush Grand Father was arrested three times for making dirty business with the Nazis during War World II; they were selling special gasoline for the combat airplanes. The Nazis killed 10 million people at least but the weapon business during the war killed 50 millon more. Those false heroes are the ones who want to write history and give lessons of democracy; They do not have enough oil but huge debts for at least 200 years; this is why they want to invade to steal natural resources.
Bush Grand Father was arrested three times for making dirty business with the Nazis during War World II; they were selling special gasoline for the combat airplanes. The Nazis killed 10 million people at least but the weapon business during the war killed 50 millon more. Those false heroes are the ones who want to write history and give lessons of democracy; They do not have enough oil but huge debts for at least 200 years; this is why they want to invade to steal natural resources.
Chavez did not kill Martin Luther King, nor Kennedy, nor one million people for oil with lies, nor intelligent services sending Anthrax virus letters to its own population while blaming other country, nor 3000 nuclear weapons pointing to all the countries in the world, nor spending extreme corrupted communist 700 billion dollars on military expenditures every year, nor world record of drug addicts, nor CNN or FOX Nazi retarded, nor 13 trillion dollars debt.
Chavez did not kill Martin Luther King, nor Kennedy, nor one million people for oil with lies, nor intelligent services sending Anthrax virus letters to its own population while blaming other country, nor 3000 nuclear weapons pointing to all the countries in the world, nor spending extreme corrupted communist 700 billion dollars on military expenditures every year, nor world record of drug addicts, nor CNN or FOX Nazi retarded, nor 13 trillion dollars debt.
In an interest-only loan or mortgage the borrower only pays interest each month. This makes it cheaper than a conventional mortgage, in which part of each month's payment goes towards the principal and part goes towards interest. These loans have become popular because the monthly payments are lower, allowing borrowers to afford a larger home.
However, these loans can be dangerous, especially in a down housing market. The interest rates are generally fixed for the first 1, 3 or 5 years. After that, they convert to a conventional loan, with a higher monthly payment. Most borrowers take on these loans because they assume they will sell the home before the interest rate increases. In a down market, they may not be able to sell. If they cannot afford the increased payment, they may have to default on the loan, and foreclose on the home. So, when the rate starts to adjust, you would need to refinance again. And, either get a fixed or another interest only adjustable. And, yes, I do believe you mean ARM. Although, if you have extra money every so often, you can pay down the principal in extra payments.
j:
As long as you remain a full-time student, you will continue to qualify for "in-school deferment". You won't have to begin paying your loans back until you finish law school.
The only requirement is that you remain registered at least half-time at an eligible institution, and that you don't take more than 6 months off at any time during your schooling.
By the way – this is an automatic feature of government-backed student loans (Stafford/Perkins/PLUS), but it is not necessarily characteristic of all private loans. Also remember that the in-school deferment requires attendance at an "eligible" school. Some students have pursued law or medical degrees at foreign universities, only to discover that some of these schools are not participants in the Federal Student Aid program, and therefore, ineligible for in-school deferment.
I hope that helps – good luck to you!
… you watch this, & then all you talk about is coco leaves ????
Coco leaves are the greatest enemy of the Venezuelan peoples…& idolly talking about stupid sh*t like coco leaves (& Jerry Springer) is the greatest enemy of the people of the USA…
To get a student loan, your first step is to fill out the Free Application for Federal Student Aid (FAFSA). You should submit your FAFSA as soon as possible – you can make estimates and correct the details later.
Once you’ve completed your FAFSA, you’ll want to visit your school’s student aid office. Ask what kind of aid you might expect.
Try this site
http://free-college-information-usa.blogspot.com/
Free College information on financial aid for students, scholarship, student loans and more.
You know what my answer to this problem is? I am joining the Marine Corps. I'm gonna be programming. There are plenty of different jobs in the Corps other than just killing ppl. So if I were you I'd go to marines.com and search for your nearest recruiter to see what they could do for you. What do you have to lose by talking to a recruiter. Nothing.
I am in the same situation as you. Here is what I did.
Fill out your FASFA form online (www.fafsa.ed.gov). Add all the schools that you intend to attend on your FASFA. Different schools have different deadlines to have your FASFA submitted. The earlier you submit your FASFA the better so that you can meet the deadline for all the schools. You must obey your school's deadline not the federal deadline for your state. The school receives money from the FED and they prepare a financial aid package for all the students that meet their deadline and that are accepted. The student package consist of scholarship, Stafford and Perkin loans. This all depends on your family's expected contribution toward your education. Whatever amount extra that you need you have to get a private student loan which is credit base. Your parents could also take a student loan on your behalf. For private student loans try Discover student loans and sallimae as. Your school should have a list of all the lenders that offers private student loans as well as a list of scholarships that you can apply for. Good Luck !!!!
If your expected family contribution is zero and you are interested in working in undeserved communities after you graduate for a free education. Check out the following link:
http://bhpr.hrsa.gov/nursing/scholarship/applicantbulletin/default.htm#benefits
ss
Hugh Chavez is the One…He knows (LMMFAO!!) what an asshole…puta!!! Fuck that Castro-inspirer…He is nothing but a puta!!!
No one will "take over" your loans. You will still owe the money to your lender when you are in forbearance. They will simply add interest every month while you are making payments.
If you are asking about defaulting the lender will just contract out with a collection agency to start calling and hounding you to mail them payments. If you make 6 to 12 months worth of willing and reasonable payments you can ask your lender to "rehabilitate" your loan. This is when you are issued a new loan and pay off the one in default so you can get federal fin aid again. Again, rehabilitation can only be done after you have made 6 to 12 months of payments.
Chavez did not kill Martin Luther King, nor Kennedy, nor one million people for oil with lies, nor intelligent services sending Anthrax virus letters to its own population while blaming other country, nor 3000 nuclear weapons pointing to all the countries in the world, nor spending extreme corrupted communist 700 billion dollars on military expenditures every year, nor world record of drug addicts, nor CNN or FOX Nazi retarded, nor 13 trillion dollars debt.
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