The stock market’s slump during 2008 meant many things to many consumers. For one retiree, Clara Newman, it meant falling behind on her mortgage loan payments.
According to a report in SmartMoney.com, the former employee of the city of Detroit saw her pension checks decrease in number from 13 to 12 times a year. Her adjustable-rate mortgage also reset – to a rate $500 higher than it was previously. Combined, these two factors caused Newman to miss payments.
"When you can’t pay people, this automatic thing calls you morning, noon and night," she told the website. "I was stressed that I would get foreclosed on for almost a year."
Newman considered refinancing, but chose against it after weighing her equity versus the sizeable closing costs she could face. Instead, she applied for a loan modification, and was granted one in January 2010. She was given a fixed mortgage with a 3.5 percent interest rate, significantly lower than the 9.75 percent interest rate her adjustable mortgage carried.
Homeowners facing foreclosure may also find relief through the Home Affordable Refinance Program. Launched last spring, this federal government initiative is aimed at helping homeowners with negative equity or high loan-to-value ratios refinance their mortgage loans under more affordable interest rates.
Mon, Mar 8, 2010
Debt Management, Debt Reduction Advice, Getting Out of Debts