Loan Modification
LOAN MODIFICATION CAN SAVE YOUR HOME AND SAVE YOU THOUSANDS OF DOLLARS
Loan modification is taking your existing loan, which may have a variable interest rate, or may be higher than the present value of your home, and working with your lender to modify your loan in response to the borrower's long-term inability to repay the loan pursuant to the loan's current terms.
Loan modification will make the loan affordable for you so you can make the payments and get current. This will allow you to be able to afford the monthly mortgage payments and will allow the mortgage company to keep the loan and not have to go through the expense of foreclosing on the property. Loan modification usually includes a reduction in the principal balance of the loan to reflect the present value of your home and will reduce the interest rate and allow for a lower monthly mortgage.
Many times lenders are open to modifying a loan because the cost of doing so is less than the cost of default or foreclosure. Remember, they are in the business of lending money, not owning real estate.
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Loan modification is becoming increasingly more and more popular with banks. The exciting part is that guidelines are increasing to include more homeowners. At the moment, there are a couple requirements to be aware of:
You must have a verifiable source of income. The bank will ask you for documents to substantiate your income, this is required. Suitable documents include pay stubs, income tax returns, w2’s and bank statements just to name a couple.
The loan modification must be being done for your primary residence not an investment property, however banks are becoming more lenient and in some cases will provide a loan modification for an investment property.
There has been a reduction in your income or an increase in your expenses due to a hardship. The hardship could be a job loss, sickness, death, medical bills, divorce to name a few. A common hardship, among homeowners is an adjustment in your rate which in turn would cause your mortgage payment to increase.
In many cases loan modification will be the perfect solution to your current situation however negotiating with the lender for a modification on your home loan can be an overwhelming process. That is why retaining the services of an experienced Loan Modification Firm is extremely important.
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