Mortgage Loan Modification
Mortgage Loan Modification – Every homeowner facing a challenge in making their current payment should apply for a mortgage loan modification. You may qualify for a reduced payment at a significantly lower interest rate.
When borrowers get in trouble they can’t make loan payments. The bank is left with few options and they usually go in this order;1. modification, 2. short sale, 3. deed in lieu 4. foreclosure. Often, the best option for homeowners who’s goal is to keep the home is loan modification. Mortgage loan modification is a process where the terms of a mortgage are modified outside the original terms of the contract. In general, any loan can be modified. Mortgage loan modifications allow the bank to make loan payments more affordable for borrowers. A loss mitigation option that a mortgage modification allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments. When approved for a mortgage modification your lender may offer better interest rates, loan terms, loan balances, or other parts of the loan agreement. A loan modification helps prevent you from getting too far behind on payments and risk possible home foreclosure. Only a small percentage of applicants are approved for a loan modification so be prepared to know your options.
Helpful tips when applying for a modification:
- send documents for overnight delivery using FedEx/UPS or use a high quality fax machine to send required documents (standard fax machines may be hard to read – especially bank statements)
- call your lender 2-3 days after sending documents and confirm they received and can read all the pages
- ask how long your application will be pending or when your application will expire/time-out
- call your lender at least once a week to check on status of application
Mortgage lenders have strict qualification guidelines that allow or prevent you from qualifying for a mortgage modification. If you understand what they are looking for you can be sure you can meet their requirements and qualify for the modification. They have secret formulas and requirements to qualify those applying for a mortgage modification. Some people are not aware of the fact they may have been denied for a small, simple overlooked reason. Most mortgage lenders do not even offer the reason(s) they rejected your request. They leave you lost in the dark wondering what happened. If your lender has denied a modification you will want to start thinking about a real estate short sale.
If you are upside down and do not qualify for a modification or feel a modification is not in your best interest than your next best option will be a real estate short sale. If you have equity in the property you will want to consider a traditional home sale.