What is a loan modification and how can it help me?
A loan modification is when a lender modifies the terms of a loan which they currently collect payments on. The purpose of a modification is to create a payment that the homeowner can afford based on their current financial situation, and to re-establish a loan which will perform and give the holding lender an efficient return on their investment. Loan modifications are granted on an individual basis, targeting homeowners who for whatever reason are having problems making their current payments, and do not have an option to refinance their mortgage, sell the property, or improve their financial situation. Loan modifications stand apart from refinances with no transfer of property between lenders, no new liens recorded in public records, and no new accounts on credit.
Loan modifications are accomplished through a detailed negotiation process between the servicing lender and the requesting party. A successful modification will drastically reduce the homeowner’s monthly mortgage payment(s) to a level which they can realistically handle, which means final results are determined by their true expenses and affordability. The method of obtaining the needed mortgage payment can be accomplished by one, or a combination, of the following; interest rate reduction, term extension, principal balance reduction, and/or converting payments from principal and interest to interest only. This renegotiation not only helps homeowners avoid future turmoil, it also helps save those who are currently delinquent, and in jeopardy of losing their home.
Whether you are currently making your payments on time but foresee yourself falling behind in a matter of months, or are already several months behind and weeks away from foreclosure, modifications can help you! In the currently volatile economy, many home values have depreciated and income levels have dropped. Because of this, getting out of what could be a painful mortgage is not possible, leaving many with the only option of foreclosing. A modification will allow you to get your goals accomplished and avoid future foreclosure, leaving you with a payment that you know you can make. Not only does this negotiation prevent future hardship, it can also help you get caught up if you are behind. Once you fall several months behind, a large lump sum is required to be paid to come current. Loan modifications while focusing on future payments will also help alleviate delinquent payments. Negotiations should address the delinquency and any other problems, so you have all of your hardship wiped away at the same time. Mortgage modifications for many equate to a home saving necessity, and a fresh start with true relief from their unavoidable hardship.
How do I qualify for my loan to be modified?
Various circumstances and situations will qualify one for a loan modification. An easy way to know you may be a candidate is you are financially "hurting" when it comes to meeting your monthly obligations. Living paycheck to paycheck, paying bills with credit cards, and depleting your savings are all vital signs that you may need a loan modification. Most people at that point approach a refinance, which is where many are finding they run into a wall. The most common reason for not qualifying for a refinance is the home’s value coming in less than what is owed on the home, otherwise known as being "upside down". The second factor that will hinder one obtaining a new loan will be overall credit ratings. With a tightening finance market, top tier credit is generally needed to obtain a competitive loan with an affordable rate. Many are finding that without high credit scores, they do not have sufficient credit to get a beneficial loan. Lastly, due to many wage and hour cuts across the board, many homeowners no longer meet the debt to income ratio requirements for extended financing. The reduced income works against increased bills and generates monthly debt levels that are too high. All of the examples given are prominent suggestions of one who needs assistance through a loan modification.
Call us or e-mail us now. Lars Kier 813-333-9930 or Lars@usrps.net