If you’re struggling with the monthly payments on your mortgage in these difficult times or know someone who is, read on!
January Financial has evaluated a few different services and has partnered with one that we feel very good about. It comes highly recommended from a long-time trusted advisor and offers services that we haven't seen out there so far.
What is loan modification?
Loan modification is when a lender agrees to change (modify) the terms on a mortgage. For example, let's say I'm currently paying 6.5% on a 5-year fixed loan but I can't afford those payments. The bank may agree to lower the rate to 3% for the next 5 years, and 5% for 25 years after that, so I can afford the payments.
Why are lenders willing to do this? Two reasons:
- They're getting a LOT of pressure from the government to avoid foreclosures at any cost.
- They realize that they're better off to be making at least part of what they should be making, as opposed to nothing if the house goes to foreclosure. Foreclosing is a lengthy and expensive process, and it depresses the local market, actually making the problem worse.
Although a loan modification means that the lender takes less money than they were getting originally, it's better than making nothing and having to pay for the foreclosure and guaranteeing they take a loss, most likely.
Loss mitigation is much better than loan modification (which is what almost all other companies out there are offering). First they attempt the loan modification. If that doesn't work for whatever reason, they will then assist the client in negotiating either a short sale or a short-pay refinance A short sale is when you agree to sell your home for less than what you owe on the mortgage, and the bank agrees to accept less than what they are owed in order to make the sale happen. This means the job doesn't stop with the loan modification, and your files are assisted to completion. Credit restoration, debt settlement and credit counseling services are also offered, meaning we can assist if you don't own a home.
This process covers one property (as many loans as are on one property) and loan size is unimportant. Some companies charge progressively higher prices for higher loan amounts and extra liens. We offer a 100% guarantee if we are unable to obtain a loan modification, and will also refund a pro-rated amount of the original cost if a modification is obtained but the client declines. We have seen results of fixed rates as low as 2-3%, principle reduction in the 6 figure range, and payments dropped by as much as 50%!! (We can send you some documented cases)
Here is the procedure for starting a loan modification:
- We will do a consultation with you and explain the pros and cons to see if loss mitigation is something worthwhile for you.
- Fill out the required paperwork and explain payment information.
- After reviewing your file, our provider will contact you to make sure you are positioned as well as possible for a favorable outcome. If things look good then they will begin the process.
- The process typically takes between 5-16 weeks for completion.
We know that there's a lot being said out there about loan modification and debt consolidation. If you're struggling with your mortgage payments or credit card balances, you owe it to yourself and your family to see what options are available to you. Please don't hesitate to call or email us to learn more.
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