Loan Modification, Investment Property: Can They Go Together?

Posted on: January 5, 2012

Categories: Other Articles

Author: lbuen

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Wanted: Loan Modification for Investment Property

Are you having a hard time paying for the monthly mortgage of your rental property? Do you wish there is a way to adjust the rate or payment schedule of your investment property loan just like lenders do with primary homes? You are not alone. Many real estate investors are feeling the brunt of the ailing economy and are wishing that there is such a thing as loan modification for investment property.

Loan Modification – Investment Property Savior

The economic downturn has not only jeopardized the roof over the heads of primary homeowners; the sources of rental income of many real estate investors have also been agitated by the economic instability with many of them going on default and possible foreclosure, while some are starting to have difficulty making their monthly mortgage payments as their adjustable rates shift. However, the problem for these particular property owners is that even if they are not spared from the threats of foreclosure, most of them have a hard time arranging for a loan modification for their investment property. Most lenders are more sympathetic to homeowners about to lose their shelter than to investors about to lose their investment.

Loan Modification for Investment Property – Also a Property Market Savior

We have heard a lot of stories and complaints about lenders doing all sorts of things just to avoid modifying loans of primary homeowners, but at least, home loan modification is part of the mainstream. What about property investors? Lenders are turning a deaf ear to investors requesting for loan modifications for their investment properties. Now it may be understandable that lenders give priority to primary residences because it is a basic need for people while investment properties are just investments. However, they also must realize that investment properties are also a part of the entire housing market and foreclosed rental properties still bear a negative impact against the local property market. Remember that an investment property loan usually underlines how strong the property is rather than how financially strong the borrower is. Hence, foreclosing on investment properties may just lead lenders to foreclose more properties in the area – primary or rental homes. This should give you a gleam of hope that somehow your lender may agree to do a loan modification for your investment property. Let us take a look at factors that can increase or decrease the odds of getting a loan modification for investment property.

Increase Your Chance of a Loan Modification – Investment Property Must Have Tenants

Despite the resistance of most lenders, there is no harm in trying to renegotiate with you lender.

Some say that one pivotal factor that may turn the odds in your favor is if your investment property has tenants because this means that it is earning income and your debt-to-income ratio would show a better standing. However, this does not demonstrate financial hardship, a key ingredient in helping a borrower, even an investor, get approved for loan modification. Just because the investor made a mistake investing in a property that is now underwater, this does not qualify as hardship.

With lenders facing a mountain of the regular home loan modification requests, your chance of getting a loan modification for investment property may be slim, but it is still worth a shot because, who knows, your particular lender may just approve it.

 Loan Modification, Investment Property: Can They Go Together?
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