We were recently given a modification. But the payment is still to high. Is it possible to qualify for a loan on a cheaper house given our situation?

Asked by Wattpuppy, Oxnard, CA Mon May 2, 2011

Achieving the modification was a two year process. It was very painful and now that it's done, we realize that the bank has structured the modification such that we are only slightly better off than before. Would it be fruitless for us to attempt obtaining financing on a more affordable home given the mess our credit score must be?

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Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Mon May 2, 2011

Unless you can sell the current home, you would need to be mindful of the impact the modification has had on your credit, and you'd need to steer clear of the "buy and bail" guidelines lenders have put in place and which would be considered if you intend to retain the current home while purchasing a new one. Not sure where your interests lie. The video below explains buy and bail in simple terms.

Thank you,

Rob Spinosa
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, ,
Mon May 2, 2011
Wattpuppy, sorry to hear about the two year ordeal.

It may or may not be possible to qualify to obtain a loan but I'd lean towards the doubtful side - contrary to the rosy and optimistic replies you may see.

Unfortunately a loan modification is viewed by lenders as a derogatory credit event. In addition, and you don't mention this in your post, many consumers who process a loan modification end up with a string of late payments on their credit report as well.

Would it be fruitless to try? Never. Experience has taught me there can often be options where we thought there were none. I just don't want you to get the impression it's going to be a slam dunk.

It only costs you about $17 for a lender to obtain a credit report for you, and from that we can analyze how badly the loan modification has impacted your credit. If you have specific questions about obtaining the credit or you'd like our help just contact us via our profile. While I am physically located in Spokane, WA about half my clients are in CA.

Before any of that you need to know how you will be exiting your current home. If it can't be sold to pay off the current loan (short sale) then you've got an entirely different circumstance.
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Ariel & Karen, Agent, Hollywood Beach, CA
Mon May 2, 2011
Depending on what you owe on the home you are in, and what it will sell for, you could possibly sell it as a short sale, or as a short pay. These are two different types of sales, one that impacts your credit and one that does not but that requires you to pay off the difference between what you owe and what you can sell for. There ARE FHA financing programs available that allow a buyer to purchase a new home immediately following a short sale if she remained current on payments during the short sale process.
We are short sale specialists and work with a skilled lender who helps people purchase again following short sales if they meet certain criteria. Our short sale success ratio is extremely high. If you would like more info, please contact us. Good luck!
Ariel & Karen
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Bonnie Sterl…, Agent, Simi Valley, CA
Mon May 2, 2011
Dear Wattpuppy,

Is is so stressful. I would recommend that you consider what is really important to you and make a plan that relates to your personal goals. If homeownership is important to you, meet with a lender and go over your financial situation as it relates to homeownership, of this home or another. Are there other adjustements you can and want to make to keep this home . Are you able to rent a home where you want to live for much less than your home loan currently costs you? I dont professionally spend a lot of time looking at the rental market so I was surprised to learn what rental rates were when I recently helped clients determine what to rent their own home for. Credit repair is a process, it will take time. Good Luck and good for you to be out there asking for resources and assistance.
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Keith Geller, Agent, Camarillo, CA
Mon May 2, 2011
It is possible, It depends on qualification.

You can call me at your convenice.
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Barry Shapiro, Agent, Camarillo, CA
Mon May 2, 2011

There is a great interactive video on this website, which walks you through your options. Your loan mod story is unfortunately all too common... Good luck with this.
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Tim Moore, Agent, Kitty Hawk, NC
Mon May 2, 2011
My question would be what are you going to do with the current home? Are you planning to sell it and buy a new home that is cheaper? I would speak to a loan officer to see if you can borrow and how much, then talk with a local Realtor about selling to see if that will work for you in your situation.
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