Negotiating An Obama Loan Modification On A New Home Loan
We’ll cover ways to negotiate with your lender to get the best possible Home Loan Modification terms for your new mortgage under the Obama Loan Modification Program.
What to expect from your bank offer
If the bank does approve you for a Mortgage Loan Modification there are a few constants:
- They won’t write down the principal balance but will adjust your interest rate and you’ll still owe the same amount on your mortgage. Additional costs are often tacked onto the end of the mortgage term after a loan modification.
- They will not waive late payments. These are also often tacked onto the end of the mortgage after a mortgage loan modification.
- The bank will require a good faith payment of one to two month’s mortgage payment as a sign of good faith. This is very hard to negotiate away.
- The bank will demand that you afford a reasonable market interest rate as part of your Mortgage Loan Modification.
Apply now for Obama’s Loan Modification Program and get best assistance
What you can negotiate
- Interest rate. Your interest rate will typically be reduced between 2% and 4%. You will have problems negotiating for a 3%. It’s not going to happen.
- Post- home loan modification adjustment cap. After a fixed period (typically 5 years) your mortgage loan modification will expire and your rate will become adjustable again. You can negotiate the cap of your adjustment.
- Good faith payment. Every bank will require a good faith payment typically one to two months of mortgage payments.
Take yourself out of the equation emotionally
Use these tips to be a better negotiator with the bank:
- Have a game plan. Be clear in knowing what you are trying to accomplish.
- Keep a calm demeanor and realize you’re working with another human.
- Be polite, yet assertive.
- Appeal to people’s sense of fairness.
- Get something if you’re asked to give something.
- Document everything.
- Elevate to a decision-maker.
Negotiate to a point where you’re in the target range of your hoped for mortgage loan modification payment and interest rate and good faith payment. Once you’re there take the offer.
