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How To Reduce Your Mortgage Payments, Stop Foreclosure And Get A Loan Modification

How to avoid foreclosure freeway signLoan Modification is the most effective tool you can use if you are facing a financial hardship and are having a difficult time making your mortgage payments. When successfully negotiated, your loan is restructured so that is more affordable and will fit your budget. This is accomplished by either reducing the interest rate, reducing the principal balance or a combination of both. The terms of your loan can also be increased, from say 30 years to 40.   In addition, if you have any late fees they can also usually be waived or added on to the loan balance – a home saver if you are a couple months behind and would not be able to come up with the money!

The bottom line – a good mortgage modification will allow you to afford your mortgage payments and help you avoid foreclosure.

Can you do this yourself?

Sometimes! BUT, do you want the best results possible? You have to realize that your lenders loss mitigation departments are trained to get the most money out of you that they can. You cannot just call them and expect to get the lowest interest rate possible! (Contrary to popular belief, this is 1%, not 2%).

Many homeowners have successfully negotiated their own terms, but you must understand that there is a ton of work involved.  In addition to preparing the huge stack of paperwork you need to send into the bank, you must also diligently follow up with the bank on a weekly basis.  You must also be prepared to continuously send in the same paperwork over and over again (I.E. your last 2 months bank statements, current tax returns, etc.) as your lender will likely lose it.  Anyone who has worked on a loan mod can vouch for this.

Lenders are so backed up with files right now, even if you do make through the mess and get a mod approved on your own, chances are it won’t be as good as if you hired an experienced modification company/attorney to negotiate for you.  But, if you are willing to do it yourself, just be prepared for all the work that is involved.  It’s like having a part time job.

When To Consider Getting Help

On the other hand, there are many professionals who have worked extensively with various lenders and know what the process entails, how the system works and how to get you a payment that is going to help you.  By this, I mean an agreement between you and the bank that actually lowers your monthly payments so you can comfortably afford them.  Many mods end up with homeowners having to pay higher mortgage payments than before (as is the case when an interest only loan goes to a 5% interest loan) and that really isn’t going to help someone who is struggling to make the current payments, is it?

When you use a loan modification company to negotiate on your behalf, you will have to pay a fee.  However, often times this fee will pay for itself in your mortgage payment savings over just a few months time. Negotiators also know how to put a complete packet together according to your lenders guidelines to speed up the process. Remember, time is of the essence! PLUS, these companies can perform these services before you pay any fees, so there is no risk to you.  This is due to the recent law changes by the government to stop companies from charging upfront fees before a loan mod has been completed (accepted by the lender).man floating on sinking house needs help

To learn if you are a candidate for a modification, what payment changes you can expect, how long it will take and more just call toll free 888-766-3693.

Many times, the companies we have reviewed can help you even if you have been denied loss mitigation help in the past.  Especially, if you were denied trying to do it yourself.  More often than not, homeowners just call up their lenders and say they need lower payments.   They are transferred to the loss mitigation department and are asked a series of questions… one wrong move here and you are denied.  That’s why it’s very important to go over all your financial information and make sure it fits into the guidelines before you contact your lender for help.

Be careful! There are many scammers out their trying to prey on the misfortune of others. Don’t let this be you. Can you imagine paying a company to do your loan mod and then finding out months later that they did nothing and you are losing your home??? This happened much more frequently in the past then currently (2012), but it can still happen.

We have compiled a short list of reputable mortgage loan modification companies that have completed many successful mods on the homeowners behalf and can show you examples of these as well.  This is crucial when choosing the right company. Do you want a “specialist” who has attempted a couple loan mods out of their apartment or a reputable company who has hundreds or even thousands of homeowners? Call and ask them for examples from your specific lender! See what they have obtained for others in your situation so you can know roughly what to expect. Every situation is different, but this should give you an idea of what to expect. The calculator to your right can also tell you what to expect and if you are a good candidate for these programs.

A reputable company will pre-qualify you before they take you on as a client. They know what the lenders require and will only take on clients they can help.They can guide you in the right direction if these programs are not going to be a good fit for you.

All of the companies we have reviewed can provide you with information on their business, i.e. their credentials and referrals from previous clients. The companies who use attorneys can also give you information on them so you can do research and make an informed decision. Just ask them!

Special Note: Beware of TV and radio ads for mortgage modification. Many times, these are just generic ads run by lead generation companies. They route your calls to whoever pays them for leads, so who knows who you will talk to when you call! The sites we reviewed are maintained by the actual companies and only they will call you back. You WILL NOT get bombarded with 15 phone calls from 15 different companies if you fill out their contact forms like other websites out there!

Here are the latest loan modification companies we have reviewed:

As with any important decision, it is always best to speak to with different parties and get each ones individual opinion and advice.  We recommend you contact these companies and ask them questions you have prepared about your specific situation.

To See If You Qualify For A Mortgage Loan Modification, Call 866-766-3693 to speak with an experienced modification counselor or fill out the form below to see if you are a candidate for a loan modification.

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More Tips For Success…

the loan modification guide ebook pictureFor those who want to go at this alone, we have prepared a guide to assist you in the steps you need to take when applying for a loan modification with your lender.

How To Qualify For A Loan Modification – Step By Step Guide

We have put together a series of posts to help homeowners who are trying to negotiate with their lender on their own.  This series took a long time to put together and post online, so give us a +1 below if this helped you!

1. How Can A Loan Modification Help Homeowners – Learn the various ways a mortgage modification can help homeowners.  They do more than just lower interest rates!

“Here’s a  common scenario with many homeowners  who eventually lose their homes.

The original monthly payment was manageable and mortgage payments were made with no problem.  Then over the course of the loan the interest rate increases. Unfortunately, in many cases salaries do not increase at the same rate.  Then there are other household bills that must be paid. Including medical expenses not covered by insurance.  At some point in time, the ability to make the monthly mortgage payments becomes more and more difficult.  Eventually, a homeowner stops making the payments completely.

To help a homeowner in this situation, a mortgage mod that reduces their current interest rate lowers the monthly mortgage payment so they can afford it.”

2. Steps To Take When Applying For A Home Modification – Learn all the steps you must take to increase the chances of getting your modification approved. Excerpt:

” One of the most common reasons  homeowners are not approved for a loan alteration is because they failed to fill out the paperwork completely and accurately.  Your lender already knows you can’t make your current payment.

But the lender also needs to be certain that you will be able to make the mortgage payment even after you’ve been approved for a lower payment.  A lower payment does not automatically mean you will be able to make your payments. Providing “before” and “after” financial statements must show that you will be able to make your new lower payments if you are approved.”

3. How To Prepare A Hardship Letter – A document that must be included in all mortgage packages is the hardship letter.  Learn how to properly prepare yours. Excerpt:

“When preparing your hardship letter, it’s important to be honest.  Your lender will require documentation from you to back up everything you claim in your Hardship Letter.  They can see your credit file too! So make sure you don’t make a statement about something if you do not have proof.  Failure to provide proper documentation can question your credibility with your lender and cause your application to be denied.”

4. How To Prepare Your Income and Expense Worksheet – A vital part of the entire process! Get this one wrong and your whole application is denied.

Excerpt:

“Preparing Your Income And Expense Worksheet is part 4 of this series.  This document is such an important part of the entire process, it is vitally important to take the time and make sure it is correct and complete.  This is one document where the “numbers have to add up.”

Your income and expense worksheet will provide a clear financial picture for your lender.  The information you provide will  determine if you qualify or not. ”

5.  Following Up With Your Lender – After you turn in your docs, it’s not over yet! Learn how often to follow up with your lender and what you should say.. Excerpt:

“You cannot just sit around and wait to hear from your lender.  With thousands of homeowners all trying to get approved just like you…it’s not a matter of if you’re going to get lost in the crowd…it can and does happen.  Also, due to the amount of paperwork involved it’s very easy to forget to include some required information. ”

6.  When To Look For Help – If the whole process becomes overwhelming to you, you might need some help.  Here are the signs to look out for.  Excerpt:

“Ask yourself the following questions:

1. Are You 100% Sure You Understand What Documentation Is Required?

The amount of documentation a lender requires can be overwhelming.  Missing just one of those documents can cause your loan mod to be denied.

2. Do You Feel Comfortable Negotiating Terms With Your Lender?

Always remember, whatever terms your lender offers it will always benefit the lender first and foremost. So you need to be well versed in many aspects of the entire process and how it works.  Be honest with yourself and your abilities. ”

This is the end of the series! We hope you learned some helpful information and wish you luck on modifying your loan.  If the bank hasn’t taken your house back, there is always a chance to modify it.  Never Give Up.

 

To find more information to assist you, you should visit our loan modification articles page!

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