What Is a Loan Modification? Can It Help Homeowners in Trouble?

  • Posted on: 24 Dec 2022

  • What is a Loan Modification?

    A loan modification is a financial procedure in which the loan’s terms are altered by lowering the interest rate and lengthening the loan term to allow the homeowner to avoid foreclosure.
    However, the lender has to agree with these terms, and our specialists are dedicated to working directly with your lender to not only acquire lower monthly payments for you but also allow you to keep your home and save your credit.

    Is Loan Modification right for me?

    Yes, if you are one of the countless Americans struggling in today’s financial market with an adjustable-rate mortgage and not enough equity in your home to refinance.

    A Loan Modification is ideal in this situation, because, unlike short sales or forbearances, loan modifications allow you to both keep your home and quickly begin to make lower monthly payments. Additionally, through the loan modification process, there are no negative credit or tax consequences, unlike both short sales and forbearance.

    What happens in a Loan  & Modification Procedure?

    We will renegotiate with your lender to come up with new terms for your loan and a monthly payment amount you can afford!

    What do you need from me to start my loan modification?

    To get started on your loan modification, our specialists will need some primary financial data, such as your income, home, how much you owe, how many properties, and how much you can afford to pay per month. We will then contact your lender and demonstrate that you cannot afford anything higher than this without risking foreclosure, thus allowing us to renegotiate your loan terms to get you a new affordable monthly payment amount.

    Are the lenders and banks willing to go through the modification process?

    Yes, absolutely! With the current turmoil in the real estate market, lenders realize that they would lose a great deal of money by trying to sell your home on the open market.

    The Loan modification benefits not only you, the homeowner, by gaining lower monthly payments, but the lender also, allowing them not to have to foreclose on your home and sell the property in a weak real estate market.

    Will I have to meet with the Lender or do any Paperwork?

    No, not. We will take care of everything involved in the loan modification process, from all the paperwork to negotiating directly with the lender on your behalf. Once you retain us, we will take care of everything, allowing you to keep your home, and you will never have to deal with your lender directly.

    What other options are available to homeowners who don’t qualify for Modification?

    BK7- The bankruptcy that allows you to discharge (much of, if not all) your unsecured debt. You will qualify to discharge your unsecured debt if you meet specific income guidelines. You protect the equity in your home within limits. Each state has its own limits often based on your family status. A CH 7 stops a pending foreclosure but offers no court resolution.

    BK13- The bankruptcy that the courts prefer. It provides a repayment plan for all or a portion of unsecured debt, generally over 3-5 years. It resolves a foreclosure by providing a means of repaying past-due mortgage payments. CH 13 also provides a payback plan on credit cards, and your income and home equities are extensively considered. However, there are limits to how much you can owe in secured and unsecured debt.

    Forbearance- A process in which the lender agrees not to foreclose on the property as long as the borrower agrees to a payment plan to reduce the total amount owed. Under this process, there will still be high monthly payments. However, the foreclosure will have to stay while you make your payments.

    Short Sale- The lender allows the property to be sold for less than the total amount owed on the mortgage. The bank takes a loss through this process. However, you will not be able to keep any proceeds from the sale of your home.

    Hard Money Loan- A loan based on the equity of your property.

    Short Payoffs- Discounting the loan and paying the lender off, while keeping the property. Great for junior liens.

    Cash For Keys - Negotiating with the bank to give you cash to move, and avoid needless lengthy negotiations.

    However, loan modifications are ultimately the best option available to homeowners who can no longer afford to pay their high monthly mortgage payments. A loan modification consists of altering the terms of the loan by lowering the interest amount and lengthening the loan term. In addition, your credit report may be upgraded or saved.

    Call today for a free consultation at (888) 803-7889 CreditRepairEase.com

    Ten Tips to Make you More Attractive for a new Home Loan - even if you have bad credit
    How to fix credit to buy house?