Today’s mortgage rate sometimes works to bring a home’s value down. If your mortgage loan rates cause your home loan to be higher than the value of your home, there are two options that you can use so that you avoid foreclosure. One of which is to refinance home mortgage (which is to replace an existing obligation with another under different terms). And the other is to negotiate a short payoff.
A short payoff is a process of accepting lesser amount of the principal value owed on a home loan by a lender. Short payoff allows you to sell your home for less than what you owe.
There are things that are needed to be known to enable you qualify for a short payoff negotiation:
• The capability of being to pay off all debts that are owed
• The present mortgage payment paid up to date
• An excellent credit (that is, people with mortgages for poor credit cannot assign for a short pay off negotiation.
If also, you have a second mortgage on a home that lost its value due to the market, it is necessary to consider negotiating a settlement that will be of benefit to both you and your mortgage broker. If you are on a current mortgage, that is, your first mortgage, you can save up money to eliminate the junior lien. If you are lagging in your mortgage, then, you are in a better position to negotiate a settlement. When your home has lesser value than what you owe, it is possible to negotiate a second mortgage payoff.
Steps to be taken to successfully negotiate a payoff:
1. Balance of First Mortgage Loan: a second mortgage lender usually payoff your first mortgage so as to be able to foreclose on your property. If the debt on your first mortgage is very high, the second mortgage must put out more money to eliminate the first lien. Sometimes, when waiting for a foreclose process to finish, they usually don’t desire to tie up large amounts of money for a long period of time. Therefore, if your first mortgage loan debt is high, it is possible that you may have a better chance of negotiating a payoff.
2. Explain in a good detail using documentations like medical bills to show that you cannot afford to make payments.
3. Request a payoff amount.
4. Don’t expect that the lender will accept any offer you make but when requesting, start negotiating with an amount you can afford easily.
5. Show evidence that the value of your home is significantly lower your first mortgage.
The reason why payoff negotiations are necessary is because if successful, you are able to avoid foreclosure of your home mortgage. Also, it is important to know that a very good credit history is a big determinant to whether or not you negotiations will be successful which means that you have to do all the necessary requirements that makes your credit score a good one.