During a difficult economic time, many homeowners have lost income and are faced with the possibility of losing their homes.
Homeowners who are faced with foreclosure may be considering applying for a loan modification in order to lower their mortgage payments.
What is a loan modification? In a loan modification, the borrower and the lender reach a mutual agreement to change the terms of a mortgage.
This change in terms in intended to lower the monthly payment so that the homeowner is better able to afford his or her monthly payments.
Common adjustments are either lowering the interest rate, extending the term of the loan or both.
Who is eligible for a loan modification? According to the Department of Treasury, anyone with high combined mortgage debt compared to income or who is "underwater" (with a combined mortgage balance higher than the current market value of his house) may be eligible for a loan mod.
This initiative will also include borrowers who show other indications of being at risk of default.
As reported by USA Today, the loan modification program applies to people who are unable to make their mortgage payments and those payments exceed 38 percent of their monthly income.
Who is not eligible for a loan modification? People who bought homes for investment purposes.
Eligible homes must be occupied by the owner.
The mortgage amounts must also meet certain guidelines.
How do I get a loan modification? You will need to contact your lender and ask for the loss mitigation department.
Explain your situation to them.
They will assess your situation via phone calls and paperwork to determine whether or not you qualify.
It is always advisable to hire good legal counsel when applying for a loan mod.
Why would my bank modify my loan? It is in the bank's best interest to modify a loan when possible.
For one thing, they don't really want to take your home from you because chances are they will not be able to sell it for what you owe on it.
They would take a large loss on the sale.
If there is any chance that you will be able to pay the loan back through a modified agreement, they will prefer to go that route.
There are also government incentives for a bank to grant a loan modification.
For example, they can get $1000 for each eligible modification they grant and $1000 a year for three years as long as you stay current on your payments.
Homeowners who are faced with foreclosure may be considering applying for a loan modification in order to lower their mortgage payments.
What is a loan modification? In a loan modification, the borrower and the lender reach a mutual agreement to change the terms of a mortgage.
This change in terms in intended to lower the monthly payment so that the homeowner is better able to afford his or her monthly payments.
Common adjustments are either lowering the interest rate, extending the term of the loan or both.
Who is eligible for a loan modification? According to the Department of Treasury, anyone with high combined mortgage debt compared to income or who is "underwater" (with a combined mortgage balance higher than the current market value of his house) may be eligible for a loan mod.
This initiative will also include borrowers who show other indications of being at risk of default.
As reported by USA Today, the loan modification program applies to people who are unable to make their mortgage payments and those payments exceed 38 percent of their monthly income.
Who is not eligible for a loan modification? People who bought homes for investment purposes.
Eligible homes must be occupied by the owner.
The mortgage amounts must also meet certain guidelines.
How do I get a loan modification? You will need to contact your lender and ask for the loss mitigation department.
Explain your situation to them.
They will assess your situation via phone calls and paperwork to determine whether or not you qualify.
It is always advisable to hire good legal counsel when applying for a loan mod.
Why would my bank modify my loan? It is in the bank's best interest to modify a loan when possible.
For one thing, they don't really want to take your home from you because chances are they will not be able to sell it for what you owe on it.
They would take a large loss on the sale.
If there is any chance that you will be able to pay the loan back through a modified agreement, they will prefer to go that route.
There are also government incentives for a bank to grant a loan modification.
For example, they can get $1000 for each eligible modification they grant and $1000 a year for three years as long as you stay current on your payments.