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Home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop, according to a report issued Tuesday.

U.S. home prices rose for the fourth consecutive month in August, according to the monthly Standard & Poors/Case Shiller Index, although rising unemployment and the pending expiration of the first-time homebuyer's tax credit raise doubts about whether the trend can be sustained.

Loan Modifications are a very emotionally charged issue. If you are a homeowner in trouble and want information on your chances of getting a much needed loan modification it can be a nightmare to get the right information for your specific situation. You have probable heard about the many scam artists ready to take advantage of desperate homeowners that will do pretty much anything to save their home. This is why it is best to get expert advice from one of the many government appointed (FREE) institutions.

However it is a good idea to get a general idea of your situation in order to at least make the right questions.

Let’s present a hypothetical scenario:
You are the owner of a house worth $300,000 on which you owe $400,000 you also have debt racked up on a second home. Can you get a loan modification?
This scenario is rather common. In the past years many saw wisdom in investing in bricks and mortar and buying to rent. When they struggle to find someone interesting in renting they struggle to pay both mortgages, and that’s if they haven’t lost their job.
Unfortunately, even though the scenario is common it is not a good candidate for a loan modification. The reason for this is that homeowners with two homes are too financially committed to qualify. In order to qualify for a loan modification your mortgage payments must not be over 31% of your income. If your mortgage payments are over 31% you are considered a high risk homeowner that should never have spent such a high percentage of their income on a mortgage.

The best options in this case is to try to keep payments and keep your head above water (easier said than done)  and down size your mortgage payments as soon as possible in order to qualify for a loan modification.

The question is, if you are in that situation, can you carry on your primary home until the economy decides to come back?

That will depend a lot on how high your interest rates are and what type of interest (ARM or Fixed) you have. The good news is that interest rates are low right now so even the riskier ARM loans are not so bad, at least for now. The issues might come in 2011 when many experts are predicting interest rates are going to climb. For those that are already overburdened this could be what brakes the proverbial camel’s back.

The key is to plan for that very real possibility and downscale now you can plan for it. This might mean short selling your second home and putting your mortgage payments below 31% in order to qualify for a loan modification. However if it is a case of losing both homes or keeping one it is a bit of a no-brainer.

Whatever your circumstances your best option is to get help straight from the experts. The good news is that this information is free as the government is providing it as part of their loan modification program.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

A government program designed to help at-risk homeowners refinance their mortgages is struggling, even as conventional mortgage refinances have surged in response to historically low interest rates.

Reading the news for the last two weeks you would either think the government has the credit crisis in control after hitting its 500,000 trial loan modifications or that there is no hope after seeing the rise in prime mortgage foreclosures and the rise in unemployment.

The truth is that nobody really knows what is going on right now in the economic arena. Last week Citigroup lowered their “emergency fund” for bad or non performing loans which surprised analysts that fail to find evidence of an improvement of credit payment ability.
Loan modifications can be a great solution for some. For others it is not a possibility or simple will setback the inevitable with hard earned tax dollars.

Loan modifications are not for everybody because loan modifications can only “attack” certain causes of high loan payments, namely high interest rates, length of tenure, interest stability  and principal payment structure.

This means that if you already have a long mortgage (30 or 40 years), it is a fixed mortgage (as opposed the a variable or ATM mortgage) and low interest rates there is not much a loan modification can do for you because you already have a “good deal”.
All is not lost though. There is one option left open for you that might just be the difference between foreclosure and saving your home, and that is balloon payments.

What is a balloon payment?

Balloon payments are a kind of interest break your mortgage provider gives you so your monthly interest payments are not so high. Let’s explain with a simple example. Imagine you owe your bank $100,000 your interest rate is around 3% which means you will pay around (probably a little less)  $3,000 interest the first year. However what your bank or mortgage provider can do in order to lower your interest payments and therefore your mortgage payment is defer a portion of your principal to the end of the mortgage “forgiving” the interest on this amount until the end of the mortgage. Going back to our little example, your bank might defer $20,000 leaving you with “only” $80,000 to pay for, dropping your first year interest payments by over $600. We have oversimplified this example heavily, but you get the idea.

The only catch with this option is that you are leaving yourself a lot of principal to pay till the end of your mortgage. If you are planning to sell your home in the near future this might not be a problem. But if you want to keep it long term you are going to have to find the way to pay the “balloon payment” once your mortgage tenure is over.

Balloon payments can be used as yet another tool to reduce your monthly payments by combining it with other options that might be open to you. Research all your options and contact an expert. Experts will not cost you money because the government is providing the best advice for free.

Related posts:

1. Creative Ways a Loan Modification Lowers Your Monthly Payments
2. Are mortgage modifications cost effective
3. Loan Modifications, The Truth Behind The Spin

Related posts:

1. Creative Ways a Loan Modification Lowers Your Monthly Payments
2. Are mortgage modifications cost effective
3. Loan Modifications, The Truth Behind The Spin

Sales of existing homes rebounded sharply in September to their highest level in two years, getting a strong boost from first-time homebuyers, according to a report released Friday.

Existing home sales posted a strong increase in September, according to the National Association of Realtors, as first-time homebuyers took advantage of low interest rates and a soon-to-expire $8,000 tax credit.

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