Learn about Loan Modification
Are you looking into the many ways to stop foreclosure? Are you concerned that you won’t find a solution that allows you to remain in your home?
Although you’re facing a difficult situation, there are many ways to fix your problem. For example, a loan modification is often used to stop foreclosure dead in its tracks.
When you apply for a mortgage, you agree to make a monthly payment based on the terms and conditions of your agreement. If you fail to do so, the lender has the right to repossess your home.
If the terms and conditions of your home loan no longer suit your situation, you may be able to request a modification.
As the name suggests, this is a way to restructure your mortgage to ensure that you can make all future payments. While the lender is not required to agree to a loan modification, they may do so as they don’t want to move forward with the time and cost associated with foreclosure.
There are many types of loan modifications, with each one offering its set of benefits. Some of the most common types include:
- Reduced interest rate.
- The addition of more years to the loan.
- Converting the interest rate from variable to fixed.
While these are three different things, the end goal remains the same: to lower the payment so you can more easily afford to stay on track.
Are you Eligible?
If this all sounds good to you, it’s time to learn more about your eligibility. Generally speaking, here are the eligibility requirements:
- The ability to prove that you are unable to make your mortgage payment as the result of financial hardship. Examples of this would be a job loss or illness.
- The completion of a trial period to show the lender that the new payment will work for you.
- The submission of all required documents. This can include but is not limited to proof of income, financial statement, hardship letter, bank statement, and recent tax returns.
The only way to know if you are eligible for a loan modification is to contact your lender and discuss this option.
In addition to in-house loan modifications, there are multiple government programs in place, such as the Home Affordable Modification Program (HAMP).
If you are unable to make your mortgage payment, it’s possible that foreclosure could be in your future.
Fortunately, you don’t have to go down this path. You can contact your mortgage lender to discuss your options, which may include a loan modification.
By taking this step, you could find yourself with a mortgage that better suits your current financial situation. Subsequently, you don’t have to worry about missing payments and to lose your home as the result of foreclosure.
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