Loan Modification
What is a loan modification?
A loan modification is when a homeowner and a lender change the terms of the mortgage agreement to new terms that both parties are bound by. There are many different ways that a homeowner can modify their mortgage. Some common terms that homeowners often modify are interest rates, principal balance owed, changing rates to a fixed rate, forgiveness of defaults/fees, or any combination of these terms.
When Should You Modify A Loan?
When you can make your regular monthly payment but can't afford to catch up on the past due amount. Loan modification is an excellent alternative to having your home foreclosed. Lenders do not wish to foreclose on your home because they would make more money by modifying your loan agreement so that you can continue to pay them. Foreclosure is usually the last option for both you and the lender. These services also seem to benefit individuals who possess a sub-prime mortgage or are victims of predatory lending.
Is It Difficult To Negotiate A loan Modification Myself?
In most cases if you don't have extensive knowledge in real estate or loans it's difficult to negotiate the most ideal terms yourself. Many lenders will not even consider loan modification unless you're at least 30 days late on your payments. Many consumers who try to negotiate a loan modification with their lenders often get in over their heads. Lenders will give you the run around, throw confusing "industry terms" at you, refuse to negotiate, or negotiate terms in their best interest. As with many issues involving large sums of money it's always a good idea to use someone with knowledge of the industry to negotiate on your behalf. Attorneys are usually the best people to retain to negotiate a positive agreement for you. They are familiar with your states laws and often will get you better terms than any other service could. The mortgage companies have lawyers and knowledgeable employees working for them why shouldn't you! In short a loan modification is a complicated and serious financial decision that you should never attempt to handle on your own.
Related Tags: mortgage, bankruptcy, foreclosures, foreclosure, interest rates, attorney, sub prime, predatory lending, loan modification
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