I have had two people contact me this week asking about modifying their mortgage. The reason I decided to bring this to my blog was because both were mislead by past advice and luckily they thought to look into it more before committing. One was going to work with a company from another state and pay them before they did any work. I am not an expert in this area of real estate but here are a few points that I have ran across in the past.
There are a few points I would like to make for homeowners in trouble trying to get a modification of mortgage.
- DON"T pay anyone in advance to assist you in the modification because they have not performed yet and I do beleive it is illegal for them to do so.
- DON'T work with a company that is in a different state as their laws may differ then ours.
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If you are low on cash and living paycheck to paycheck, find a part-time job.
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DON'T put off calling your lender when you discover you will have difficulty making your monthly payments.
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If your credit is not up to par, try and repair it before you refinance your loan. Seek assistance if needed.
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If your loan is modified, your interest rate may be a little higher due to your poor credit.
- DO talk to an attorney if you feel that there is a need to do so.
Once you have received a modification, make your payments on time to improve your credit.
You can also get the modification completed on your own but it will take a lot of work on your behalf and you MUST keep calling the mortgage company over and over and over again even if they refuse you the first time.
Prior to calling for a modification you need to do your homework and have a workable plan that you can afford to live on and your lender would be willing to accept. You must PROVE to them that your plan will keep your loan as a performing loan as it is a commodity for them.
You should work on your finances BEFORE contacting your lender. This means you need to know how much income you have coming in every month, what the total amount of your monthly bills and if they can be adjusted. I recommend creating a full financial report with all your assets, and debts listed. This includes your fun and enjoyment expences ie... cable, internet, cell phone, etc.
There are many nonprofit counseling services that you can contact to help you put together this financial report at no cost. Many of these counseling services will be willing to work with you and your lender.
You will need to devise a plan to submit to the lender on how you propose to pay off the loan, again the counseling service may be able to assist you with this plan.
Now your finally ready to contact the lender and tell them what your financial situation is and what your plan to repay the mortgage is. When you submit this plan the negotiation can begin.
A few sites that can assist you are listed below.
Consumer Credit Counseling: http://www.cccsstl.org
National Foundation for Credit Counseling: www.nfcc.org
US Dept of Housing and Urban Development: http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
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