Five years ago the average person, like myself, had not heard of loan modifications. They were not done very often. Today, because of the economy we are in, loan modifications are almost as common as refinancing. In this brief article I will answer the question: "How does a loan modification work?"
When a financial hardship takes place in the life of a homeowner, their ability to pay their mortgage on time is greatly affected. The mortgage payment in almost always the single largest monthly expense they have.
When a persons income is lowered for different reasons and they get behind on their house payments, a series of events takes place. They will get a late notice and a late charge if the payment is more than 15 days past due.
will also begin receiving phone calls at that point from their lender.
After 30 days, the credit agencies will receive notice that they are 30 days late and their credit score will be impacted. From the 30 day to the 90 day point, if a payment has not yet been made, a series of letters and phone calls from the lender will lead up to a notice of default and a notice of pre-foreclosure.
Three of the most common ways to stop a foreclosure are:
So, how does a loan modification work? The principle is pretty simple. You negotiate with your lender. You are asking them to consider your current financial hardship as a reason for lowering your payment. If they agree, they may lower it by several different methods. They may drop your interest rate, lower your principle balance, extend the length of your loan, or do a combination of two or more of these options.
The most difficult part of the process is convincing them to help you. But it is in your favor to look into getting a loan modification if you can't afford your house payment any more. They (your bank) do not want your house. They do not want to foreclose and take possession of a home in this bad real estate market because they will not be able to sell it for anywhere near what you owe for it.
You can try to do a loan modification by working with your bank yourself. But it is a complicated process and I recommend at the very least that you speak to loan modification expert first. Get their opinion as to whether or not you could even qualify for a loan modification. If their fees are reasonable, and they feel your chances of being approved are good, then proceed with them as your representative.
Of the 3 most common ways to stop a foreclosure, a loan modification is definitely the first choice for a person that can get their lender to work with them and make their payment low enough to manage.
Ron has been writing articles for nearly 4 years. His newest interest is in home power tools. Come and visit his latest website that discusses the Fein Multimaster 250q [http://www.multimastertoolreview.com/fein-multimaster-250q.html] power tool and how well it works for the do-it-yourself project. Go to: [http://www.multimastertoolreview.com]
When a financial hardship takes place in the life of a homeowner, their ability to pay their mortgage on time is greatly affected. The mortgage payment in almost always the single largest monthly expense they have.
When a persons income is lowered for different reasons and they get behind on their house payments, a series of events takes place. They will get a late notice and a late charge if the payment is more than 15 days past due.
will also begin receiving phone calls at that point from their lender.
After 30 days, the credit agencies will receive notice that they are 30 days late and their credit score will be impacted. From the 30 day to the 90 day point, if a payment has not yet been made, a series of letters and phone calls from the lender will lead up to a notice of default and a notice of pre-foreclosure.
Three of the most common ways to stop a foreclosure are:
- 1. Sell the home before is is auctioned off at the foreclosure
sale. - 2. File chapter 13 bankruptcy, which is the worst option as far as your credit is concerned.
- 3. Apply for and receive a loan modification with your lender.
So, how does a loan modification work? The principle is pretty simple. You negotiate with your lender. You are asking them to consider your current financial hardship as a reason for lowering your payment. If they agree, they may lower it by several different methods. They may drop your interest rate, lower your principle balance, extend the length of your loan, or do a combination of two or more of these options.
The most difficult part of the process is convincing them to help you. But it is in your favor to look into getting a loan modification if you can't afford your house payment any more. They (your bank) do not want your house. They do not want to foreclose and take possession of a home in this bad real estate market because they will not be able to sell it for anywhere near what you owe for it.
You can try to do a loan modification by working with your bank yourself. But it is a complicated process and I recommend at the very least that you speak to loan modification expert first. Get their opinion as to whether or not you could even qualify for a loan modification. If their fees are reasonable, and they feel your chances of being approved are good, then proceed with them as your representative.
Of the 3 most common ways to stop a foreclosure, a loan modification is definitely the first choice for a person that can get their lender to work with them and make their payment low enough to manage.
Ron has been writing articles for nearly 4 years. His newest interest is in home power tools. Come and visit his latest website that discusses the Fein Multimaster 250q [http://www.multimastertoolreview.com/fein-multimaster-250q.html] power tool and how well it works for the do-it-yourself project. Go to: [http://www.multimastertoolreview.com]
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