Common Myths and Misunderstandings About Home Loan Modifications
There is a cloud of mystery around the subject of home loan modification. Many homeowners believe they are ineligible for home loan modification based on a variety of baseless assumptions and rumors. Acquiring home loan modification is not as difficult as many imagine it to be, though there are several hurdles a homeowner must go through to reach their goal.
Here are a few common myths about home loan modification and what the truth around them really is. There is no reason for a homeowner to fear loan modification, it can only serve to help them stay in their homes.
MYTH: Anyone is eligible for home loan modification, regardless of their previous mortgage payment history:
This is simply not true. There are a variety of factors surrounding a homeowner’s eligibility in home loan modification. If a homeowner qualifies for refinancing, they are not eligible for home loan modification. Refinance eligibility implies that the homeowner is not in such dire straits as they suggest, whether it is true or not. A homeowner must be in severe financial trouble due to a change in their income, climbing debt, job loss, and so on. To qualify the homeowner must prove that they are completely unable to afford the mortgage rate as it stands.
MYTH: You must be late on a mortgage payment in order to qualify for home loan modification:
A homeowner does not have to be late on their mortgage payment, but it does help get attention from the mortgage lender if the homeowner is late on a payment. Lenders do not have the time or resources to keep an eye on every homeowner under them and they do not know who is in trouble and who is not. A late mortgage payment can bring attention from the mortgage lender and possibly get the process for home loan modification qualification rolling. While being late is not necessary and qualifying for home loan modification without being late is not unheard of, it can be a huge help in pushing the process forward.
MYTH: Applying for home loan modification is expensive:
Like with any law firm, there are more expensive and cheaper options for any homeowner. There are home loan modification firms available that do not charge for the initial service, they only charge after the lender has approved the home loan modification application. Homeowners must be informed of firms in their area and shop around like they would with anything else. Knowledge is power.
MYTH: A bad credit score disqualifies you for home loan modification:
Home loan modification is not applying for a new loan like refinancing, home loan modification is adjusting the loan to fit the homeowner’s financial situation. A bad credit score does not have a significant affect on home loan modification, and in some cases home loan modification can improve a homeowner’s credit score as they are making regular, smaller payments towards their mortgage.
