When you are facing home foreclosure, there are many ways you can still save your home if you take actions early enough. I will talk more about different ways to save your home later in separated blogs. In this blog, I am going to talk about how to use loan modification to save your home step by step by example.

Then what is loan modification?

A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor/borrower can afford. In the other words, borrower/mortgagor makes a request to change one or more terms on the mortgage loan.

Since you are facing foreclosure, that means you already have some PITI arrearage (that is, unpaid principle, interest, Taxes and Insurance). All or portion of the PITI arrearage can be added to the current balance of your existing mortgage in the loan modification.

By doing this, you don’t need to make a lump sum of PITI arrearage in one time now. The amount of PITI arrearage could be several thousand or more than ten thousand dollars depending on how long you did not pay your mortgage payments and how much it was per month.  Rather the dollar amount of PITI arrearage will be paid back by amortizing for many years depending on what terms the lender is going to decide.

In order for your lender to agree for the loan modification, you have to show that you have a capability to pay the new monthly payment. For example, you just got a new job after several months of unemployment and you new salary will be enough to pay the monthly payment after loan modification.

Let’s use an example to illustrate how this can save your home in foreclosure:

You have a home worth $200,000 dollars with a mortgage loan balance of $180,000 with 15 years term and 5.5% interest rate. Your monthly PITI payment is $1670/month ($1471 principle and interest and $200 tax and insurance). You have been living in this house for almost 2 years. Now, you have not been able to make your mortgage payments for last 4 months and you got a notice of default that tells you “if you do pay, you cannot stay” from the lawyer of your lender. The lender requested you pay a one time payment of $8,880 in lump sum including $6,680 PITI arrearage plus later penalty of $700 and $1,500 legal fee in order to make your loan current.

You were just wondering what you could do in order to make the loan current and keep your home.

Right at that moment, you opened a letter from a company you were interviewed two weeks ago. It was a job offer from that company and it asked you to start working next Monday. You are very happy about this good news.  But, the bad news is that the annual salary for this new job is few thousand dollar less than your previous one. The new salary only allows you to pay $1450 per month. Your excitement and happiness now are gone immediately after you realize that not only you do not have the $8,880 lump sum to pay the lender, but also you are about $220 dollar short to pay the current mortgage payment of $1670 per month.

You thought that there was no way you can save your home from foreclosure with this new job. But, you did not quit and you went online to search for solutions. You just came across this article that offered you the exact solutions you were looking for.

Following Are Step by Step on How to Do a Loan Mofication:

1.       You picked up your phone and call your lender at the phone number in the letter of the Notice of Default;

2.       You told the staff member in the Department of Loss and Mitigation that you just find a job and want to do a loan modification;

3.       The staff member asked you to show your documentation to prove you do get a new job;

4.       You sent the letter of employment from your new employer to the lender by FAX;

5.       Next day, you got a call from the bank staff member whom you spoke with telling you. He/she told you that your request was rejected because you didn’t have enough income to cover your new mortgage payment if the lender were to agree for a loan modification;

6.       You told the banker that you did the calculation and the result showed that you could still afford the mortgage payment. You wrote down calculation result as following and sent it to the lender.

a.       Request one – Add the $8,880 PTIT arrearage to the current loan balance:  Total new loan balance = $188,880

b.       Request two – Change the term from 15 years at 5.5% interest rate to 30 years at 6.5% interest rate.

The new monthly mortgage payment = $1,194

The monthly tax and insurance payment still the same $200 as before.

Total new monthly PITI payment is $1394.

If you want to do the calculation by yourself, click HERE for the mortgage calculator.

7.       You sent this request with the calculation results to the lender and asked for a reconsideration of a loan medication.

8.       Few days later, you received a letter telling that your request had been accepted after their careful review.

9.       Now, what you need to do is to wait for the lender to arrange a time to sign the new legal papers or mortgage.

10.   Before that, I want you to send other request to the lender immediately after you receive that letter and request them to waive the later fee, legal fee, or any other administration fees.

Why you can do that? You can go back to read your Mortgage Letter. In your previous Mortgagee Letter 00-05, page 21, paragraph F, “Allowable Provisions” states: “All or a portion of the PITI arrearage (principle, interest, Taxes and Insurance) may be capitalized to the mortgage balance. Foreclosure costs, late fees and other administrative expenses may not be capitalized.

So you lender cannot add amount of Foreclosure costs, late fees and other administrative expenses to your mortgage balance. But, can lender ask you to pay upfront for that? I don’t know. Can lender waive those fees for you? Yes. They may and may not. You may never know until you ask. If lender agrees for that, your monthly payment will be even lower than what we calculated above.

11.    You congratulate for not giving up lightly and for knowing how to do the loan modification. Now you and your family members have a home to stay.

In a summary, I have shown you how to use loan modification step by step to save your home in foreclosure in this example. Your case or situation may be different from this example. But, there are important points I want you to remember and you can apply those principles to your case:

1.       By modifying the loan, you can avoid paying the lump sum of the PITI arrearage upfront and spread those payment into may years;

2.       You can change shorter mortgage term to a longer term to lower down the monthly payment and make you payment affordable even your income is less then before;
3.       You can ask your lender to waive the legal fee and later fee.

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One of the most applied loans worldwide is Personal Loan. Personal loans are cash, debts or arrears taken on by an individual consumers. These loans can range in terms, size, conditions or dimensions and one of the most usual type of personal loan is called mortgage or mortgages. This is an agreement by which a person lends money from a bank or a huge institution to afford a home.

Personal loan is not actually centered for home use. Car upgrades, tavels, appliances, bill payments, businesses and many others are applicable too. By the way, loans can be secured or unsecured loans.

Loans are certainly a more effective way to achieve financial freedom in an emergency basis. Only if the borrower has the capacity to pay it back in a period of time. Loans however, are not advisable to individuals who can’t afford to pay back a single cent or if an individual suffers financial crisis.

In any way, personal loan, in my opinion is the best answer to financial need of an individual.

Bridging cash flow gaps has never been easier, thanks to whoever invented payday loans. But more thanks should be given to the company who started offering no fax payday loans!

Although we have fears about falling into a debt trap, you are not limited to just one lending company; at juridicaldata.com they have a list of thousands of companies operating all over the country. They have various tools to help you find the best deals when it comes to short term loans or payday loans as many call it. Also available at the website are the physical address and contact information of various lenders.

Don’t fret, emergency cash is just a few clicks away.

So you have had some problems with your credit in the past, maybe even with a car loan, and maybe the circumstances were not your fault.

Even if they were, learning to manage your credit and make timely payments to your creditors is something that you learn along the way.

But in the meantime, you have gotten your act together and now you are looking at a way to finance a new car and your current credit problems are behind you.The problem is that the credit bureaus have a memory like an elephant, or at least that is the way it seems when you go to apply for an auto loan.

It seems like they remember every little thing, even though you are in a much better financial position today and have learned your lessons.The truth is that it is not at all impossible to get a great deal on a car loan even if you have bad credit.

Of course it is easier if your credit is good, but if that were the case, you would not be reading this. In fact, an auto loan when you have bad credit is an excellent way to firm up your credit score and affirm the fact that you have gotten your financial act together.

There are many sources that will give you credit for an auto loan even if you have bad credit. If the dealership that you want to purchase the car from is not real innovative, you may want to bypass your neighborhood banks and look elsewhere. If you live in New York and the company offering you the loan is in California, does it really matter, since even if they are in your same city, you will more than likely be mailing your monthly payments anyway. In other words, do not limit your searching to your local city, but take the time to search for who is willing to offer the best deal for your needs.

You may also want to consider car leasing options, but be careful here. Usually the credit requirements are a bit higher, and you need to be aware of how many miles per year you anticipate putting on the car. If you exceed that number of miles, say 12000 per year at the end of the lease, you may end up paying a whopping 30 cents per mile over what it should be. Also be aware that with a car lease, you are not building any equity in the car, even though you still have all the responsibilities for gas, oil, maintenance, tires, tune-ups, insurance, etc.

On the bright side, your payments will probably be lower, depending on the estimated resale value of the particular make and model you are looking at.If you do not need to get a car right now, you may want to spend some time in getting your credit report cleaned up as much as possible.

Do not pay a credit repair company for this, since you can do everything they would do, once you know what to do and how to do it. You can get more information about winning your credit bureau disputes and raising your credit score at Improve Your Credit Score.You can get a great car loan even with bad credit. Be aware that you will likely pay a bit higher of an interest rate on the loan, but this makes sense in the eyes of the lender since he feels like he is taking a chance on you.

Your goal is to prove him wrong after you get your loan and your car, by making each and every payment on time, which will go a long ways towards reversing the negative items in your credit report.

Generally payday loans companies provide loans in the form of liquid money i.e. in the form of check. As it is already known payday loans are fast approval loans, its true but companies which provide these loans through check may increase the actual time in which the borrower get cash money. To reduce this time some payday loan companies provide payday loan in the form of cash. Such companies known as cash advance payday loan companies.

As the traditional payday loan cash advance payday loan is also provided online. For this the borrower have to fill an online application form. There are many websites through which you apply for cash advance payday loans online. The form is consists of some text fields and buttons. Through these text fields the lender requires some information. For cash advance payday loans online the lender requires personnel information of borrower, its employment details. For cash advance payday loan online the borrower must engage in a permanent employment and get a monthly salary of at least $1500. This is because due to maximum limit of payday loan which is $1500.

As other payday loans the maximum duration for cash advance payday loan online is two weeks or you can say fifteen days. In this time interval the borrower have to repay his loan along with service charges and interest. Some cash advance payday loan companies first deduct service charges and interest and then provide loan amount to borrower. For example is a person applying for cash advance payday loan of amount $1400, then $100 are deducted for service charges and $150 is deducted for interest of fifteen days. After deducting these amount the borrower get $1150. note that this is only an example for actual service charges and interest you may contact for particular payday loan company

Payday Loans are short-term, secured loans that use your direct-deposit pay as a security against your debt. Unlike other types of loans, payday loans have an extremely high percentage: in some cases as high as 500%!

If you’re considering a payday loan then there are some things you should know:

• In order to obtain a loan you must currently be employed and receive your pay via direct deposit.
• You will be required to pay back your loan each time you get paid; so, if you get paid every week you’ll pay back part of your loan every week.
• There is a common cap of $1500 on these loans, but you will probably only receive the minimum amount offered by the institution, unless you’ve taken out multiple payday loans in the past and successfully paid them back.
• Your credit is not checked but your employment history will be checked.
• With a payday loan you will generally end up paying back over twice the value of the loan. For a $250 loan you can expect to pay back over $500.

Personally, I wouldn’t recommend taking out a payday loan, as it can be more financially draining than simply going through a brief financial rough period

An unsecured loan are loans that are not backed by an asset, an example of a loan backed by an asset is a home mortgage loan because your house is equity for the loan. Examples of this are simple IOUs or credit card spending. A perfect example of an unsecured loan is a payday loan. There is no asset that you use as equity on your loan, there is nothing to be repossessed if you do not pay the loan and a lot of times no credit checks are preformed before giving out an unsecured loan.

Unsecured loans are usually quick on approval so you can get cash faster. Unsecured loans are easier to get for those in good credit standing. If you have bad credit you will have trouble finding an unsecured loan and when you do the interest rates will usually be high. A payday loan, however, does not do credit checks and is a good source of unsecured loan to good and bad creditors a like. These loans are safe if the business and financial institutions issuing them are reputable business. They are a perfectly common occurrence in today’s society and should not be viewed as an unsafe alternative to bouncing checks or over drafting on your checking account.

Mortgage applications drop Applications to buy and refinance homes dropped last week, an industry trade group said on Wednesday, the latest sign that US housing remains mired in a downturn.

The Mortgage Bankers Association’s mortgage application index slid 3.4 percent to a seasonally adjusted 643.7 in the week ended June 15.

The drop in applications piled on to reports from the country’s builders and the government this week suggesting any sustained housing rebound could be next year’s business. “We’re not through with this correction,” said Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta.

Prices have to drop as much as 8 percent, depending on the house type and location, to pare an unusually large supply of unsold homes lingering on the market, he said. “If new supply is priced initially significantly lower than existing homes of the same rough quality, then maybe they don’t have to come down,” said Miller. “But price correction is an absolute necessity, affordability got way out of hand.”

Housing starts fell more than 2 percent in May as builders grappled with a stockpile of unsold homes, the Commerce Department said on Tuesday. Sentiment among home builders sank to its weakest level this month in more than 16 years, based on an index reported on Monday by the National Association of Home Builders. The group expects building and sales will keep eroding until late this year before starting to recover in 2008.

“The production side has clearly slowed down,” Miller said of homebuilding. However, he added: “We’re not doing a good job of clearing existing inventory, and that’s not good news for the production side.” On Wednesday, the MBA’s seasonally adjusted purchase index fell 3.0 percent to 450.9 while its refinancing applications index shed 4.2 percent to 1,776.8 on a seasonally adjusted basis.

Thirty-year mortgage rates dipped 0.01 percentage point last week to 6.60 percent, the MBA said. Average 30-year mortgage rates last hovered in this area in July 2006. Last week, the MBA reported that U.S. homeowners started the foreclosure process at a record pace in the first three months of the year. “The housing recession is showing few signs of letting up as exhibited by rising mortgage foreclosures, falling prices, and reduced construction activity,” Deutsche Bank economists wrote on Wednesday. “We remain concerned about spillover effects from the weakness in the housing data — negative wealth effects, mortgage rate resets, housing related spending.”

Among the bigger problems were subprime adjustable-rate mortgages in some of the markets that had been the hottest during the five-year record home price and sales spree earlier this decade. Riskier borrowers are increasingly being pushed into the foreclosure process as their adjustable loans reset at much higher loan rates, boosting payments beyond reach.

On Tuesday, Dallas Federal Reserve economist John Duca cautioned that the housing slump could be prolonged by lenders cutting back loans to subprime borrowers, or those with blemished credit histories. Many lenders have become much more restrictive in response to the mounting foreclosures. As a result, more applications are being rejected, and builders worry that rising mortgage rates will weaken demand for homes already pressured by tighter lending practices.

They’ve always offered small-dollar loans, but recently began promoting themselves as less costly.

Vincent Fulginiti found himself mired in debt earlier this year from a payday advance loan that he couldn’t pay off. But he credits a credit union with helping him out of a bad fix.

With bill collectors on his heels, the Brevard County father of four told his credit union about his predicament. The financial co-op gave him a personal loan at 15 percent to cover the triple-digit-rate payday loan.

Four months later, Fulginiti has paid off the personal loan, boosted his credit score by more than 100 points and secured a small-business loan from Kennedy Space Center Federal Credit Union for a fencing business.

Related Links

• Two small-dollar loan types

“My credit score wasn’t the best, but they gave me a shot. They gave me a chance,” said the 45-year-old maintenance technician, who worked for a private company. “And boy, it was like what a load was off my back. I don’t know what I would have done without it.”

Fulginiti was fortunate to find a way out of the debt trap he had fallen into, consumer advocates say. It is not widely known that credit unions have long offered small-dollar loans to members in a cash crunch.

But in recent years, with large payday lenders wielding big advertising campaigns and reeling in flocks of customers, credit unions are trying to better promote the alternatives, industry officials said.

“We’ve always provided a better option, but now we’re just trying to raise the visibility of what we’re doing,” said Fred R. Becker Jr., president of the National Association of Federal Credit Unions, a trade group in Arlington, Va. “Obviously, however, we have less marketing money than a multimillion-dollar, publicly traded payday-lending company.”

Many credit unions are gradually reaching out to people who might be “in the market” for a payday loan, he said. A few credit unions have even used the term “payday loan” in their promotions, although it is still set up like a conventional installment loan with, at most, an 18 percent rate, instead of triple-digit rates associated with payday advances.

Payday lenders dispute any suggestion that their loan costs are out of line or that they are taking advantage of people. They say they are meeting a demand, offering a service and extending credit to people, often with credit problems, who otherwise would not be able to obtain a loan from mainstream financial institutions, including credit unions.

Neither credit unions nor banks are prepared to take the riskier customers that payday lenders serve, said Ian MacKechnie, CEO of Tampa-based Amscot Financial Corp., one of the state’s fastest-growing payday lenders.

“We welcome the competition of credit unions getting into the business of small loans,” he said. “But I tell you, some of them are charging roughly the same rate we charge, and yet they’re saying they’re trying to help people.”

A customer must first be a member of the credit union by opening a savings account with a minimal balance. Repayment terms and conditions are set up over a period of months. And, in some cases, the credit union can set up a direct deduction from a paycheck to repay the loan.

“What we try to do is encourage people to build their savings so they’ll be ready for any cash crunch,” said Joe Melbourne, CFE’s president. But if we feel they do need something like the outreach loan, we let them know it’s available.”

In May, Kennedy Space Center Federal Credit Union offered teachers in Brevard and Volusia counties an “Add-a-Payday” loan — using a play on words to describe its new loan product. The short-term, zero-interest loan is designed to help teachers who will miss a pay period later this summer because of a quirk in the payroll schedule. Space Coast Federal Credit Union has offered a similar deal.

The loan for teachers is a temporary offer, but the KSC credit union is considering a more permanent marketing campaign that would promote small-dollar loans as a payday-loan alternative, said Janice Hollar, co-op president.

“It’s such an expensive product for consumers,” she said. “Once they get in the debt cycle, it is very hard to get out. We feel we can provide a viable option for them.”

Some consumer advocates said the credit unions’ efforts are laudable, but fall far short of reaching the critical mass of payday-loan customers.

“I really don’t hear of any credit unions actively promoting their alternatives,” said Lynn Drysdale, a consumer lawyer in Jacksonville. “Besides, it is very difficult to compete with the marketing that payday lenders do, like TV commercials and full-page newspaper ads. These days, you also have a lot of it on the Internet as well.”

The payday-loan industry has had a profitable run in Florida in recent years, despite the state’s effort to regulate it more closely by implementing reforms in 2002 that capped rates and fees, among other things.

Payday lenders sold 4.3 million in loans totaling $1.6 billion at an average rate of 281 percent in 2006, according to the Center for Responsible Lending, a watchdog group in Durham, N.C.

Earlier this year, the Community Financial Services Association, the payday lenders trade group, launched a national public-service campaign urging people to use payday loans responsibly and only for emergency needs.

Vincent Fulginiti, the Brevard County maintenance worker, said it was an emergency that caused him to get a payday loan, a decision he later regretted.

“My van broke down and I had to get it fixed so I could get to work,” he said. “With four kids and big family, I really didn’t have any money saved, so I borrowed $500 at the payday-loan place. Before I knew it, I owed $825 and they said the whole amount was due. They just kept charging interest and putting you deeper in the hole.”