Answers To Your Loan Modification Questions

By
Services for Real Estate Pros with Real Estate Consultants

If you are considering a loan modification you probably have several questions.  It can be a confusing time, trying to get your bills under control and deal with an unfamiliar process such as a loan modification. To get your application for a loan modification approved you will need to become familiar with the process and do your research ahead of time.  Here are answers to some of the top loan modification questions to help you understand the loan modification process.

Question 1 What is a loan modification?

A loan modification involves changing the terms on a mortgage to make the monthly payments more affordable.  This may include lowering the interest rate on the loan, extending the length of the loan, or in some cases principle forgiveness.  The goal is to help make the monthly mortgage payments more affordable for a homeowner facing financial hardship.

Question 2 How do I know if I am eligible for a loan modification?

The main thing you will need to demonstrate to your lender is that you have the ability to make the new modified payments according to the terms of a loan modification.  You will need to provide proof of your income and a financial statement that outlines your income and expenses that shows that you will be able to meet the revised monthly mortgage payments.

Question 3 What qualifies as a hardship?

In your loan modification application you will need to demonstrate that a hardship makes it difficult for you to meet your current monthly mortgage payments.  Everyone's individual situation is different and there are no set hardships, however divorce or separation, death of a spouse, loss or reduction of income, illness, military service, and job relocation are all generally considered to be acceptable hardship situations.  You will need to write a persuasive hardship letter as part of your loan modification application.

Question 4 Will a loan modification help me avoid foreclosure?

Yes, a successful loan modification can help you avoid foreclosure.  The goal of a loan modification is to change the terms of the loan and bring is current so that foreclosure is avoided.

Question 5 How do I get started with a loan modification?

Your first step should be to get a good understanding of the loan modification process.  Once you have done your research, contact your lender's loss mitigation department and request a loan modification application.

If you are struggling to make your monthly mortgage payments you should definitely consider a loan modification.  The federal government is encouraging and offering incentives to lenders to work with struggling homeowners, so there is help available.  Start your loan modification process today.

 

For up to date Mortgage and Loan Modification News visit the Loan Modification News site

Comments (1)

Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I like some of your comments about loan mods.  It's true that there are a lot of jonny come lately loan mod companies that are either total scams or people who are just not qualified to do a good loan mod.  Most people I talk to that have tried to do loan mods by themselves have not succeeded.  I talked to one person recently who called his lender & was referred to Hope for homeowners from what he told me. He said Hope for homeowners referred him to a loan mod company that was charging him an up front fee to do his mod. Go figure.  I'm of the opinion that an up front fee may not a bad thing if the company is legit & has a good 100% money back guarantee in print. I look at it this way; if a person is going to get say $500, $1000 a month taken off their payment and part of that may be wiping off 10s of thousands of dollars of loan balance, a fee is the best investment around right now, assuming they couldn't get it done by themselves.  The stats I have read from reliable sources report that only 20% of owners trying themselves succeed.  What do the other 80% do?  

Apr 01, 2009 11:44 AM