Nicole Martin's Site

If you owe more on your mortgage than your house is worth you are not alone. Last year home values went down by an amazing $2 trillion greenbacks, destroying all of the home equity of millions of homeowners. But the last thing that lenders want is to foreclose on all of those homes. To help forestall this, some banks have begun offering loan modifications featuring principal reduction. How does one know if you know if you qualify for a decrease in your mortgage balance? Do you keep asking yourself - how much principal am I paying?

Many areas have seen housing values drop much more than that during the past year.

Some qualifications are common among the different lenders.

To be suitable for Principal Reduction:

1) The house must be your first home.

2 ) You must show proof of adequate earnings to make the lower payments after modification.

3) You must be at least 60 days behind on your payments

4) OR, if you aren't yet behind, you may instead show an inability to pay because of a monetary hardship.

A fiscal trouble could be the interest rate of an ARM loan going up, loss of earnings, a family medical emergency, etc.

Not all distressed borrowers will be eligible for a principal reduction ; if not, you may be able to lower your payments employing a loan modification which extends the length of your mortgage and/or lowers your interest. In both cases, a loan modification is a useful source of relief for hard-pressed owners in these difficult times.
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