Will Judgments on Your Student Loan Affect Your Mortgage Refinance?
People who want to start a new life and a new family will always look forward
to buying a new home. This should be easy, particularly if your credit standing is good but what if you've missed a few payments and already have a judgment on
your student loans? Student loans already make it challenging to obtain a mortgage but a judgment could make your application way more difficult and could actually
affect the success of your loan.
How lenders look at you
Your student loans are not the only consideration your lenders will look at in case you need a
loan from them. They will assess the whole picture - your credit history - which will include every single cent you borrowed that has been documented. This will
include your credit card loans, car loans, mortgages and every other type of debt you might have.
Your lenders will also consider the cost of the property
you're looking to purchase, the type of mortgage and your income. If you've had a judgment on your student loans, this could cause your lenders to sit up and be
wary of you. They could either downright refuse you for a loan or hike your mortgage refinance rates.
Should the first scenario occur, you might have to find
other means with which to pay off the judgment on your student loans or go and find other creditors that will take you in and give you a loan for a refinance. Should
the second scenario hold true, you will get the money for a mortgage refinance loan but you will have to pay your debt off the amount of money you
receive.
Will your home be seized?
Believe it or not, most creditors are not interested in seizing your home. If they place a lien on your property
because of the judgment on your student loan, they might have to pay a good amount of money just to take your property.
If it gets sold, the lender may not
always get a sufficient return on their investment. Homes that get seized through a judgment do not sell at market value, which means that your creditor will not get a
lot out of it. This is why most creditors are not really interested in seizing your home just to enforce a judgment on a debt.
Furthermore, a lien does not
automatically mandate you to sell your property - you are not forced to do so. However, should you voluntarily sell the property or in this case, refinance it, you will
have to pay your debt to your creditor out of the payment you received as a result of the transaction.
Second of all, seizure of property isn't something that
most creditors will do because it is, quite simply, bad PR. They want to enforce their right to collect but at the same time, they don't want to be seen in a bad light. If
you're still unsure about the whole thing, your lawyer can shed light on certain things, particularly about laws in your state.
What you should do
First, it's
important that you see a lawyer regarding your situation. They can help guide you on what you can do regarding your credit and give you information on the steps
your creditor could take should they choose to enforce your judgment. This should help you protect your property and whatever income you may be receiving at this
time.
Second, you might want to discuss the steps you have to take regarding your application for a mortgage refinance. Your goal here is to negotiate as
best as you can fair terms - the kind that will help you keep your home and set you back on your feet again.
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Should the government pay off underwater mortgages?
If someone bought a house for $300k and it's now worth $200k, should our government funds be spent on a "rescue" plan for them?
What about the people who use the same $100k to get into a house? Why should they be left out of a home-buying subsidy program?
Families on the verge of forclosure because they selected an adjustable rate mortgage (and it did actually adjust up like it's supposed to), should they be rescued?
What about the people who paid more to get fixed rte mortgages, why should they be left out of any mortgage assistance plan?
If you or I want to buy our first house now, why should we be left out of any mortgage assistance plan?
If home values might return to reasonable levels so that young people and renters might actually be able to afford them, why would the government intervene to artificially prop a few select shaky homeowners up in their places and keep the rest of us out of the market?
I was shocked to hear that suggestion during the debate last night. Must every election be won by buying off some special class of citizens, rather than implementing policies that are fair, consistent, and available for all of us?
aurorah - I couldn't agree more. I lsot my home in my divorce, but I can't afford a new one because I lost my job to a less qualified foreign worker imported on an H1B visa. Currently my healthcare bills are higher than my income.
Bailouts are flying around everywhere, but average Americans are left out. What few dollars we have left are worth less and less in global goods every week. With the dollar worth so little, the country is on sale and U.S. property and businesses are migrating rapidly towards foreign ownership. We've shipped a huge percentage of our manufacturing, customer service, and engineering jobs to developing countries, but we're bringing in cheap foreign workers on H1B visas to take even our skilled jobs (mine was a management level position at a high tech company in California) so we have no jobs left, while the country is saddled with a huge trade defecit.
The country has been absolutely raped over the past 8 years. We're now seeing the results.
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Should they bailout the needy instead of the greedy?
Some 900,000 homes have already been foreclosed and 2 million mortgages are delinquent by 60 days or more. But the US government's plan seems to be to dole out unprecedented sums of money to the control of the very people who created this mess at the expense of the tax payer.
It has been said that the bailout is unlikely to help the real victims of this financial crisis at all, that is people who have lost their homes and/or jobs.
So why can't the government support them instead of Wall street. Instead of handing over $700+ to the CEOs and Directors of large banks, why don't they use that money to ensure that no-one is without a home by purchasing the empty ones to rehouse people and providing mortgage assistance for those in financial trouble?
Is capitalism really this inhumane?
Saint - How is that logical? Surely if you just let everything slide there will be massive social and economic turmoil that will continue to snowball and effect everyone. CEOs are going to feel this the least, but working class people, whether they have lost their homes or not are going to effected profoundly as their communities are ripped apart.
Plus, surely people who lost their jobs aren't to blame. They didn't make a bad decision, maybe they should be bailed out.
I think this whole debacle shows that idiotic free market ideology is wrong and we need more state intervention.
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Can Hilliary voters support McCain/Palin now?
McCain's new plan for home owners is almost the same as Hilliary's plan was. Now Hilliary supporter have a legitimate reason to vote for McCain.
Home Plan
John McCain believes there is nothing more important than keeping alive the American dream of owning a home. Priority number one is to keep well-meaning, deserving home owners who are facing foreclosure in their homes.
John McCain's approach to helping sub-prime or other financially strapped mortgage borrowers is built on sound principles:
No taxpayer money should bail out real estate speculators or financial market participants who failed to perform due diligence in assessing credit risks. Any assistance for borrowers should be focused solely on homeowners and any government assistance to the banking system should be based solely on preventing systemic risk.
Any policy of financial assistance should be accompanied by reforms that promote greater transparency and accountability to ensure we never face this problem again.
John McCain has proposed a new "HOME Plan" to provide robust, timely and targeted help to those hurt by the housing crisis. Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home's market value.
Eligibility: Holders of a sub-prime mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30 year fixed-rate mortgage on the existing home.
John McCain's HOME Plan Will Keep 200,000 To 400,000 Families From Losing Their Homes. "But at the same time, McCain is calling for aggressive federal action to help keep 200,000 to 400,000 families from losing their homes. That plan has many of the elements of a proposal by Rep. Barney Frank, D-Mass., and Sen. Chris Dodd, D-Conn., requiring participating lenders to forgive part of the loan principal and then write a new loan that would be backed by the federal government through the Federal Housing Administration." (Tom Raum, "Everyone's Invited: McCain Economic Plan Draws From Both Parties," Tucson Citizen, 4/17/08)
How It Works: Individuals pick up a form at any Post Office or download the form over the Internet and apply for a HOME loan. The FHA HOME Office certifies that the individual is qualified, and contacts the individual's mortgage servicer. The mortgage servicer writes down and retires the existing loan, which is replaced by an FHA guaranteed HOME loan from a lender.
John McCain will bolster groups like Neighborworks America that provide mortgage assistance to homeowners in their communities.
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