When one is in pursuit of the financial and emotional relief that comes with receiving a mortgage modification, oftentimes all you can think about is getting a break...
any kind of break...
from your present hardship.
When it's all said and done, when the babysitting of your mortgage servicer, the hoop-jumping, etc.
, is finally over, you're relieved...
but also left with an important question: Did I get a good deal on my mortgage modification? There's no simple answer.
The widespread use of mortgage modifications is still a new phenomenon, and there is no standardization to the process, because, in the end, lenders are merely encouraged to grant them; they're not obligated to do so, which means they can basically do what they want.
As a result, the lack of standardization to the process means that there's no quick and easy set of guidelines to which you can look to double-check your own deal.
The simplest and best way to evaluate the question is to determine if the mortgage modification helps you to "a noticeable degree.
" That is, if the new payment will be low enough to make the difference between losing your home and keeping it, then you can probably call that a good deal.
A new payment that, while lower than your existing payment, will not make that difference should be called into question as to its ultimate value to you.
A second test that you can casually apply is the test of 31 percent; if your new payment meets the above standard and represents no more than 31 percent of your gross monthly household income, that is further proof that you likely received "a good deal.
" The 31 percent threshold that has been popularly used as a guideline by the FDIC and other government agencies who have a vested interest in this subject; to clarify, the FDIC and others have determined that your total monthly housing obligation (inclusive of principal, interest, taxes, and insurance) should not exceed 31 percent of household gross monthly income.
As an example, this means that if your gross monthly household income is $5000, your monthly housing obligation should not exceed $1550.
Ultimately, there is no easy way to answer the question, so it has to be answered in terms of your own personal situation.
This makes the answer relative.
That said, there is nothing relative about being able to keep your house, and if your new payment allows you to do that, you should probably consider it "a good deal.
"
any kind of break...
from your present hardship.
When it's all said and done, when the babysitting of your mortgage servicer, the hoop-jumping, etc.
, is finally over, you're relieved...
but also left with an important question: Did I get a good deal on my mortgage modification? There's no simple answer.
The widespread use of mortgage modifications is still a new phenomenon, and there is no standardization to the process, because, in the end, lenders are merely encouraged to grant them; they're not obligated to do so, which means they can basically do what they want.
As a result, the lack of standardization to the process means that there's no quick and easy set of guidelines to which you can look to double-check your own deal.
The simplest and best way to evaluate the question is to determine if the mortgage modification helps you to "a noticeable degree.
" That is, if the new payment will be low enough to make the difference between losing your home and keeping it, then you can probably call that a good deal.
A new payment that, while lower than your existing payment, will not make that difference should be called into question as to its ultimate value to you.
A second test that you can casually apply is the test of 31 percent; if your new payment meets the above standard and represents no more than 31 percent of your gross monthly household income, that is further proof that you likely received "a good deal.
" The 31 percent threshold that has been popularly used as a guideline by the FDIC and other government agencies who have a vested interest in this subject; to clarify, the FDIC and others have determined that your total monthly housing obligation (inclusive of principal, interest, taxes, and insurance) should not exceed 31 percent of household gross monthly income.
As an example, this means that if your gross monthly household income is $5000, your monthly housing obligation should not exceed $1550.
Ultimately, there is no easy way to answer the question, so it has to be answered in terms of your own personal situation.
This makes the answer relative.
That said, there is nothing relative about being able to keep your house, and if your new payment allows you to do that, you should probably consider it "a good deal.
"
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