Home loan modifications are provided to home owners when they cannot afford to pay the bills on their home. These loan modifications are becoming more and more common in the United States due to the economic crisis. Families simply cannot afford their homes and there are too many out there to simply foreclose their homes and force them onto the street. A home loan modification can keep your family in your home, and is nothing to be ashamed of in this day and age.
Lenders are not on the side of the homeowner, and in these times they are as hungry for money as ever. Any homeowner needs to be informed of the home loan modification process and know if a loan modification is a viable option to get out of their payment troubles.
In the loan modification process, the lender adjusts the homeowner’s existing loans by reducing their insurance rates and adjusting the interest to a fixed rate for a specified period of time. In lament’s terms, that means they extend the loan so they can charge the homeowner lower rates, but the homeowner pays more in the long run. However, in times like these a loan modification is the only option many families have to stay in their homes. The amount they pay overall may be raised, but money is tight all across the country and the United States as a whole can’t fall anymore in this financial crisis. When you can’t fall any lower, the only way to go is up.
When considering a home loan modification, keep in mind that one day the financial situation will be better. You may be paying more in the long run, but you are trying to keep your head above water now. Now is when you need help, later is when you can do the cleanup.
The lenders are not working for the homeowner, but there are experienced attorneys all across the country dedicated to assisting families in keeping their homes. They will check to see if there have been any unlawful adjustments on your initial loan contract and work with you and your lender on possible home loan modification terms.
Stay in Your House with a Home Loan Modification
A home loan modification allows borrowers to negotiate with their lenders to change the current terms of their mortgage loan. The outcome of the negotiating often results in changes to the mortgage rate, term and monthly payment of the loan. Good negotiating strategies could lead to a permanent reduction on the mortgage rate which would allow the borrower to decrease their mortgage payments to 31% of their gross income. This opportunity is critical for homeowners who are unable to make their mortgage payments. So, how do I start the process, you may wondering to yourself.
There are several options. You may choose to make direct contact with your lender, you could hire an attorney to represent you in the negotiating process, or look for a real estate agent with experience in assisting with home loan modifications. Regardless of who initiates the call to the lender, the call will be directed to the loss mitigation department. This department will be looking out for the lender’s interest and will take any actions to ensure that the loss on a mortgage is less costly or less financially damaging to the lender. If you are prepared to represent yourself, make sure you can document your financial situation and that it qualifies you for a home loan modification.
You will be asked to provide your current assets and liabilities. If you elect to go through the process with an attorney or real estate agent, they will probably provide you with a standard form to fill-out showing your assets and liabilities. A letter explaining your financial circumstances may also be requested to submit to the bank when they negotiate on your behalf. Make sure you can validate your situation if further documentation is requested. Keep in mind that your property must be owner-occupied, meaning that you live in the home and it is not a rental property.
Homeowners requesting loan modification consideration will disqualify if they are unable to keep the house due to job loss or inability to pay their mortgage for other reasons. Once you have applied for a loan modification, be prepared to wait anywhere from 2 months to 2 years for the lender to render its decision. You lose nothing but time going through the home loan modification process but it is worth it in the end if you are able to keep your home.
