Mortgage Loan Modification – Should I Get One?
Are you trying hard to keep your home? Did you know that you could qualify for a loan modification? This is because the bank loses more money when you foreclose, it makes more when you modify, even though your payments will be less. Banks are usually resistant to changing their customers contracts, except in this case it will benefit. The fact is, a loan modification may bring your bank more benefits and money than it will bring you.
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Download our mortgage loan modification cheatsheet.
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There are many tactics you can implement before foreclosure on your home. If your finances have become tight it’s time to call your lender and inquire into what options are available. Obama’s Home Affordable Program is one of numerous federal programs now in existence that are designed to help homeowners trying to stay in their houses. Programs like this can be a good place to start for finding help in your struggle to navigate your way through this process.
Unlike a refinance, a loan modification takes your existing loan and changes the terms so your payments are lower. This can be achieved in the three ways: decreasing the principal, lowering the interest, or lengthening the term. Sometimes, a combination of any two or all three are used. A lender can either excuse late payments or charges that have been missed or add them back into your current balance so that your standing is not hurt.
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Learn about these tactics to qualify for a mortgage home loan modification.
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It takes a long time to get a loan modification approved, and there are many criteria that must be satisfied. The main criteria is proving that you are going through real financial crisis. Furthermore, you will have a greater chance if your hardship is not your own fault. For example, it will look better on your application if your hardship is the result of like getting divorced, losing your job, getting sick, being called for military duty, having a bad mortgage, or a dying family member who provided income. High amounts of credit card debt will make it harder for you unless you can prove that you needed to incur the debt to buy food and pay down bills, even if the debt is a hardship.
You must illustrate to the lender that your intent is to keep making mortgage payments. The bank will require you to make a budget plan to show how you will continue to make payments. Some banks will require that your new monthly mortgage payment can’t be in excess of 31 percent of your total household monthly income. This will be a good exercise for you to get a handle on your finances.
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Find out the secret to qualifying for a mortgage loan modification.
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A loan modification can keep you out of foreclosure. A bank would rather lose several thousand dollars instead of adding another foreclosure to their books. You bank may be very motivated to give you a loan modification. A lot of homeowners will utilize the loan modification process during this recession so that they can continue to live in their homes.
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