Home Loan Modifications. – After the economic crisis has swept the country, many families have been faced with the fear of losing their homes. If you are facing foreclosure, do not fear, you have many options.
A loan modification, for one, has proven to help many citizens keep their homes from foreclosure. It may help you too. The first thing you have to do is to know which are myths and truths when it comes to loan modification.
1. Creditors or the banks want you to lose your home.
- This is definitely a myth. Once their borrower’s home is foreclosed, they do not get back what they have investment. So as long as you show them that you are determined to continue on your payments, they will surely be willing to cut a deal with you.
2. A bad credit score disqualifies you for a loan modification.
- Unknown to many, people can still avail of a loan modification no matter how bad their credit is.
To be more specific, the most influencing factor that affects your qualification for a loan modification is your ability to pay not your credit score. The major deciding factor on whether or not you are eligible for a loan modification is you monthly income.
In the past, loan modification is only for those who are delinquent in their monthly debt payments. Today, that is no longer the case. Since there are so many borrowers who are facing foreclosure nowadays, major creditors are becoming more lenient in the negotiations to adjust the rate of mortgages. They would rather modify your mortgage payments to your monthly financial capabilities rather than having you walk away and file for bankruptcy.
Be aware that a loan modification rather than defaulting on your debt altogether keeps your creditors from filing a deficiency judgment against you. Also, it may not be known to many, when you file for bankruptcy, not only will you be paying the bankruptcy payment; you will have to pay a mortgage payment as well.
The loan modification process can be done right up to the sheriff’s sale. Again, let me stress that home loan modifications are for anyone who can prove that they have enough monthly income to support the modified debt.
If you have already been served foreclosure documents, your first move is to contact your creditor and ask to be connected to the loss and mitigation department and start to re-negotiate your debt as early as possible. Do not contact the office of attorney who served the documents. Your best move is to go straight to the creditors you owe the loan to.
In the negotiation process, you have to convince your creditors that you are determined to pay off your debt but you just do not have the means to keep up with the current terms of the debt. Give them a specific amount of what you can afford monthly along with proof of your monthly income. Sometimes, borrowers come to an agreement that they still could not afford just so they can stall on their foreclosure. Make sure that you agree only to terms that you are positive you can keep up with.
Once you have settled the negotiation, check the details out. If you have any questions or if you think there are errors in the document, notify your creditors. Re-negotiate again if the need arises. Let us reiterate that creditors will surely help you out in modifying your loan as long as they see that you are determined to pay them back. And of course, it would help that you have proof of a monthly income that can support the loan.
Inform the attorney’s office who has served foreclosure documents of the agreement you and your creditor have come up with. It would be best to do this in writing.
Consider yourself lucky once you have been granted a loan modification and make sure that you keep your end of the bargain. With home loan modifications, surely you can pay off your debt sooner and you get to keep the roof over your head.
