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Debt Settle Inc


One of the mysteries of home loan modifications is how each lender treats the debt ratios of the homeowner. While lenders do not make the information public, law firms in the course of executing hundreds modifications with lenders have become familiar with acceptable ranges at each one. The knowledge of what lenders are looking for in terms of these ratios prior to starting the process can make the difference between the relief of getting a home loan modification and  the fear of facing foreclosure.  

There are actually two debt ratios that figure in to the loan modification process. The first is the ratio of the mortgage payment which includes taxes, insurance, and HOA dues, if applicable, to the homeowner’s gross monthly income. Under the guidelines of the Obama administration’s Making Home Affordable, the ending target for the ratio is 31%. The standard of each lender, in terms of this ratio, will vary but will generally be close to that of the government program.

The second ratio, which often determines whether a loan modification is approved or not, is overall expenses, including the mortgage payment, as a ratio to gross income. Lenders look very closely at this ratio to determine whether the homeowner will be at risk of slipping back into default even after the modification lowers the monthly payment. In fact, homeowners can be well under the guideline standard for the income to housing debt ratio but end up with a non-approval due to a high number for the income to total debt ratio. It should also be noted that a homeowner can get a non-approval for a loan modification if either ratio is too low due to the hardship requirement imposed by both the government and private lenders.      

If the total monthly debt payments of a homeowner include obligations toward unsecured debt, a debt settlement can play a significant role in bringing the ratio to a level that fits within a lender’s parameters. For the total debt to income ratio, acceptable ranges can vary widely but generally fall within 38 to 45%. The administration‘s guideline allows for this ratio to go as high as 52% but in any loan modification the lender always has the final say.

While a debt settlement has a variety of benefits, the reduction of the monthly payments associated with all debts rolled in to the settlement can have a material effect on the success or failure of the loan modification process. Because the typical reduction in payments is approximately 50%, a homeowner that that may be carrying too much in the way of debt payments can bring that ratio back in line immediately by initiating a debt settlement.

Here’s how it would work:

* Homeowner’s gross income is $7,500 per month.

* Mortgage payment is $2,450 for a housing to income ratio of 32.6%.

* The homeowner is carrying about $50,000 in unsecured debt. The minimum monthly payment on all accounts is $1,450 leaving the total monthly payment on all debt at $3,900.

* The ratio of total debt to income is 52%, much too high to get approval for a loan modification.

* By initiating a debt settlement, the homeowner immediately cuts the payment on unsecured debt down to $725 per month.

* The new ratio on total debt to income drops to 42.3%, within the acceptable range of approval for the lender.

In this example, the homeowner would receive receive further relief with the approval of the loan modification which, combined with the debt settlement, would reduce payments by well over $1,000 per month. An experienced attorney can synchronize the debt settlement and the loan modification to provide other benefits as well including timing the payoff of settled accounts to provide additional cash flow and the re-building of credit scores.



Paddy

Martin Haworth


Getting through college is not that cheap and what usually happens is that students pile up debts. Whilst student loans have relatively low interest rates, especially when compared to other loans, when you have lots of them, they really turn into a headache.

And all that stressing about how to pay off your student loans can really affect a student’s concentration in his or her studies - the last thing they want.

Fortunately, there are now student loan consolidation programs available. By consolidation, it means combining all your student loans into one loan.

When you consolidate, you find one lender that would let you borrow an amount good enough to pay all your balances from other lenders. With this, you will only have one lender to worry about and one monthly payment obligation.

This is particularly important when you get to the end of your education and it’s time to tie up all those loans together into one better value package. There are plenty of lenders out there perfectly set to help you with this.

Student Loan Consolidation Considerations

Of course, it is best to look for the best student consolidation program. To do this, you must know all your options, do plenty of research, and stock up on your knowledge about the whole process so that you can make an intelligent choice.

Federal loans are usually the one that you can easily consolidate. But do not worry if your student loan is private, because there are also many lenders out there who offer private student loan consolidation.

Take note that even though interest rates may rise a bit when you consolidate your student loans, there may be no costs involved when you consolidate.

If a lender is asking you for a fee for the consolidation aside from the monthly payment obligation plus interest you have to pay, then you are probably need to ask questions of them and try to negotiate that out of the equation, or at least onto the end of the loan amount.

Always remember that there is really no need for an upfront fee for student loan debt consolidation.

As for the interest rates, here are some facts to take note of. Student loan consolidation rates are computed as the overall weighted average. This means that all the interest of the loans you are going to consolidate will be computed and the average of that will become the consolidation interest rate.

Now what about the qualifications involved of student loan consolidation? A student can consolidate as well as the parents of a student. It’s just that those parents will have to consolidate the student loans they borrowed separately from the loans borrowed by their child.

Take note also that students who are married usually cannot consolidate together their student loans now, unlike before. Students can only avail of consolidated student loan programs during their loans’ grace period (often the first six months after graduating), or subsequent to their loans’ entry to the repayment stage.

Other Student Loan Considerations

All student loan consolidation, private or Federal, can be done with any lender in the market. It is already the student or the parents’ discretion to choose the right lender for them. If the numerous loans you have acquired are from a single lender only, consolidation can still be done with still any lender.

Student loan reconsolidation can also be done (yep, you can do it again, but watch for any early exit penalties!). There are, however, some conditions to this.

The conditions include that when reconsolidating, other loans will be included with the consolidated loan. Another thing is that reconsolidation can only be done once and once only.

Bottom line is that student loan refinance through consolidation can also be a good option for you to lessen your loan burden at a vital time in your career and life.



Pat