The economic climate in the U.S. is putting a financial strain on many households. Many homeowners due to a variety of reasons…including job loss and the inability to find new… jobs are finding themselves late on their mortgage. Still others are gainfully employed but the cost of living and other expenses keep rising at a faster rate than their salaries.
The American Dream of home ownership is becoming a “nightmare” for many homeowners. Most are terrified at the possibility of losing their home.
If you are struggling to pay your mortgage you should consider looking into getting a loan modification. This may be a viable solution to your problem. In fact, most lenders will only offer a loan modification to those who are behind on their monthly payments!
What Is A Home Modification?
Basically a loan modification allows the terms of your mortgage to be changed to make it easier for a homeowner to continue to pay a mortgage by reducing your monthly payment. For example a lender may reduce your interest rate, offer you a different kind of loan or even change the length of time you have to repay. If you are behind on your mortgage payments, a modification can even bring you to current status.
Why Would A Lender Offer A Mortgage Modification?
Here’s a common scenario:
Let’s say you are working and have a regular steady income. But you’re having financial problems for whatever reason. It is in the best interest of the lender to try and work something out with you because in the long run it will cost the lender a lot more money if you default on the loan.
Plus, the U.S. government in response to the housing market downturn has “strongly urged” lenders to work with homeowners seeking to keep their homes and to curtail the alarming numbers of homes going into foreclosure.
The government has loan modification programs. The government compels lenders to work with homeowners in trouble by giving various incentives to work with homeowners. The more home that are kept out of foreclosure, the better for the economy as a whole.
Can Anyone Get A Modification?
In order to be considered for this program you will have to prove that you are experiencing financial hardship. If you are late on your monthly payments, chances are that you have a financial hardship. Often homeowners lose jobs or for some reason their salary gets reduced. Substantial medical bills can cause financial problems. If the main household income is interrupted due to military service..this can be problematic for many homeowners.
In addition to proving a financial hardship you will also need to be able to prove to your lender that you will be able to make your mortgage payments after the loan modification is completed. This means you must be able to show that you have income coming in each and every month. You cannot be unemployed in most cases.
Also note that each lender may have additional requirements. You should check with your lender to see if you qualify and to get more specific information.
Do I Need To Hire An Attorney?
That’s really up to you and how much you understand about the process. Some homeowners elect to handle the paperwork on their own.
Still others may elect to hire an attorney. As they would rather have a legal professional who specializes in this area deal with all of the legal issues and documents. Loan modification requires the ability to negotiate for better terms. If negotiation is not one of your strong points…you may want to consider hiring an attorney.
There are literally thousands of companies that will handle the process for you for a fee. If you choose to do so just make sure you are dealing with a reputable company. They should be state licensed. Check the with the Better Business Bureau for complaints.
How Long Will It Take For The Entire Process To Be Completed?
Be prepared to spend anywhere from about 30 to 90 days or more before your application is processed and completed. To help expedite the process…make sure you have all of your paperwork in order. When your lender requests other documents try to get them that information as soon as possible to keep the process moving forward.
If you’re behind on your mortgage…a loan modification is a viable option to avoid bankruptcy and foreclosure. Your only other option would be to short sale your property. If you want to move, by all means you should request a short sale from your lender. Not only can you receive money back from your lender ($3000 on a HAFA short sale is common), but you can also save your credit report from having a foreclosure. A short sale is a ding too, but it will clear up faster than a foreclosure for sure.
Call your lender and make an appointment to discuss your options. These programs have been put in place to help homeowners. Use them and take the opportunity to get your finances back on track and keep your home.
For questions about your current options (there are many!) just call 888-766-3693 or visit Loan Modification Companies for a list of companies that can help you get approved.