jacque1016 asked:
Example: Previous value of house $300K and currently paying in mortgage, current value $200K and applied for loan modification, after 2-4 years from now $400K. Will the $200K additional value be considered as equity or AUTOMATICALLY be added in the owners debt/mortgage?
Anne
Example: Previous value of house $300K and currently paying in mortgage, current value $200K and applied for loan modification, after 2-4 years from now $400K. Will the $200K additional value be considered as equity or AUTOMATICALLY be added in the owners debt/mortgage?
Anne
Gene
Read the loan modification agreement. That is the only way to know for sure.
Tyler
None of the above.
Equity is the current fair market value minus the remaining debt.
Since the fair market value will change due to outside forces, you cannot predict what the equity will look like in the future.
Even if the house value climbs from $200K to $400K and the equity changes from negative $100K to $100K, the loan balance is UNAFFECTED.
The reason you get a loan modification has relatively nothing to do with the FMV. It has to do with your ability to pay the loan as you originally agreed to do. The problem with dropping housing prices is that people who lost their jobs discovered they couldn’t sell or refinance.
If you get a loan modification and now will pay 5 years longer on the loan, your equity position will be less than someone who never had their loan modified.