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Ask theLoan ManHans Bruhner(707) 887-1275 • hans@hansblog.comYour Loan….. Refi or Modify?OK, let’s start with my area ofexpertise – refinancing. With almost 2decades in the real estate and mortgagebusiness, I have helped thousands ofpeople get into a home or refinance thehome they are in. I have traveled thecountry and spent thousands of dollarsto further my education and I am mostdefinitely an expert and I am going togive you the exact same advice that Igive to every one of my clients whenthey ask – Should I refinance?...... Myanswer is I DON’T KNOW!Well there you go, you now havefree expert advice. Here is the deal,I honestly don’t know until I run thenumbers. If the answer is yes then Idon’t know exactly what loan programor features you should get until wecompare options on a spreadsheet.These days, most people are getting a30 year fixed rate because they are solow (Yes, rates are 4.5% to 5.5% rightnow). There are a lot of choices whengetting a 30 year fixed rate mortgage:Points or no points? - Pay the costs outof pocket or roll them in? – ShouldI pay off debts? – Should I take somecash? etc. etc.The hardest part about refinancingtoday is that we have much differentquestions that we have to ask and someof the answers are making it impossiblefor people to refinance. Some peoplewho would have qualified 2 yearsago won’t qualify today. The housethat I live in and the duplex I rent outhave both lost equity to the point thatI simply don’t have enough equity torefinance and so I can’t even get a loanfor myself.So, what happens when you can’trefinance? Well, in my case, I wait.I can’t get a better interest rate andselling doesn’t make sense so I wait.Luckily for me, that was my plananyway. Some people will want to takea look at a loan modification and thisis a completely different animal from arefinance.A loan modification is when youcontact your current mortgage holderand you ask them to modify the termsof your mortgage. The bank can lowerthe interest rate, take past due amountsand tack them on to the back of theloan, lower the principal balance, letyou skip a couple of payments… Whywould the bank do this you say? Thatis a good question and you need areally good answer or they won’t. Ifyou are behind on payments and yourmortgage has just adjusted from a lowrate to a higher rate then you may be agood candidate for a loan modification.If you just don’t have enough equityto fit into a refinance and you wanta better rate then you are not a goodcandidate for a modification.You entered into a contract for amortgage and the bank wants to getpaid. If they feel you are in danger oflosing the house to foreclosure thenthey will want to work with you tokeep you in the home and save theirloan. The bottom line is that you needto prove to the bank that you can’tcontinue on the path that you are onand then you need to show them whatyou can do and strike a bargain. Acouple of things to consider….. Gettingthem to lower your principal is almostout of the question and getting themto even speak with you if you arecurrent with your payments probablywon’t happen either. I am not a loanmodification expert and I do not dothem for my clients. There are a lot ofnew companies out there and many ofthem are predatory companies lookingto make a quick buck. I have beenoffering advice to clients and referralsto reputable companies and helpingclients prepare to tackle these on theirown.I welcome questions about homeloans and the real estate market ingeneral. Please let me know what youwant to hear about in future articles.Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, pleasecontact Hans at (707) 887-1275 or hans@hansblog.com . First Priority Financial,Inc. is licensed by the CA DRE #00654852.14 - www.westcountygazette.com - 1/15/09