By Admin on Jun 12, 2009 in Personal Finance
A asked:
If somebody used the equity in their home to get a mortgage (home was paid off, except for $30,000, then home was refinanced with a $200,000 mortgage with $160,000 in cash going to homeowner, $30,000 to pay off the previous mortgage), is this mortgage eligible for loan modification? Or are only loans that were used to actually purchase a home eligible?
If somebody used the equity in their home to get a mortgage (home was paid off, except for $30,000, then home was refinanced with a $200,000 mortgage with $160,000 in cash going to homeowner, $30,000 to pay off the previous mortgage), is this mortgage eligible for loan modification? Or are only loans that were used to actually purchase a home eligible?
It should be eligible for modification as long as the owner is the one living there. If it is an investment property, than no.
HEATHER | Jun 14, 2009 | Reply
Yes- it should be eligible for a modification.
Whether it was a purchase money mortgage- or a cash-out refinance in your case- it doesn’t matter.
What might possibly pose an issue is the fact that the home owner was recently in possession of $160k and now can’t afford to pay their mortgage. One can not decide to not pay their mortgage and have it modified. One would need to experience an actual hardship in order to qualify. So anticipate some additional due diligence on behalf of the mortgage company given your circumstances.
Here is some more info on who is and is not eligible for a loan modification:
senna4487 | Jun 17, 2009 | Reply