Loan Forbearance

You know what a mortgage is, how it works, and what to watch. But when you ask for help mortgage, your lender to lyrics about as much sense as alien banter. This makes the loan modification process to confusion for many homeowners, and why many of them simply give up.

But you do not need to be a financial expert to make informed decisions. A working knowledge of loans and loan modification industry can help you better understand your situation and know exactly what your lenders average. Here is a list of terms you'll encounter in a loan modification, and what they mean for you.

Amortization: The repayment of a loan (typically a mortgage) through regular payments. Payments are determined by the duration of the loan principal balances and interest rates.

Annual Percentage Rate (APR): The total cost of the loan, including interest, mortgage insurance, points, and other associated costs.

Adjustable Rate Mortgage (ARM): A type of mortgage in which interest rate changes based on market conditions. This means your payments may increase or decrease from month to month. Most weapons have a payment cap that keeps the amount of the increase beyond certain levels.

Debt-income ratio (DTI): The ratio between the amount you pay on the loan to your total income. The lenders use to determine if or not you can easily repay the loan. The Federal Housing Administration (FHA) mortgage payments should not exceed 29% of your monthly income before taxes, and your total debt (including credit cards and other loans) should not go over 41%.

Deed in lieu: an act of passing interest in your property to your lender in settlement of your debt. It does not allow you to keep your house, but it helps you to avoid foreclosure proceedings and costs.

Equity: The amount of financial interest that you have in your property. It is calculated by subtracting the amount you still owe the value of your home market.

The fair market value (FMV): a theoretical price given to your home given current market conditions. The JVM assumes that the buyer and seller are acting freely and have all relevant information for processing.

Fixed rate mortgage: A mortgage type that uses a fixed interest rate for the duration of the loan. This gives you more stability as a borrower, your payments remain the same, regardless of market values.

Foreclosure: A process in which your property is sold and the proceeds will go to your lender, allowing them to recover their losses if you default on the loan.

Forbearance: An agreement in which the lender reviews your payment plan to help current and avoid foreclosure. It may be to reduce your monthly payments or suspend them for a given period. Unlike loan modification, it is usually only temporary and is often used as a loss mitigation option.

Good faith estimate (GFE): An estimate of the total cost of the loan, including all closing costs, lender fees and insurance costs. All lenders are required to give you a GFE within three days after applying for a loan.

Interest: A percentage of the principal added to your monthly fee, as a means of payment.