Mortgage modification is the goal that we’re all going after, but very few people actually understand the tins and outs of the process. This guide strives to correct this problem and give you real solutions on how to actually take care of the problem.
First and foremost, the simplest definition of mortgage loan modification that we can find is when you get the original agreement that you signed modified to much more favorable terms. This is usually due to a change in your financial situation. Instead of seeing the house go on the market as a foreclosure, you can turn to mortgage modification — but only if your lender is willing to play ball. They may or may not depending on a wide variety of factors. There are some federal guidelines now in place to help you really figure out your options and what you can do in the days, weeks, and months ahead.
You have to realize that the mortgage lender really doesn’t want to modify your agreement. They would rather make temporary arrangements, not permanent ones that are actually going to save you money in the long run. When you save money in this manner, you are actually costing them money. Any loan can be modified, but it’s really up in the air in terms of whether or not you’re really going to get it accepted.
There are a few different types of modifications out there. You can get your interest rate reduced, or a modification of how the interest rate is computed. You may go from a floating to a fixed rate.
There can also be a reduction in principal, but this isn’t always in season. The lender may try to work things out differently. There’s also a way to lengthen the loan term, which would bring your payments down as well.
There can be a reduction in late fees as well. The modifications can be combined — you can get your interest rate reduced as well as having your monthly payment capped to a percentage of household income. Continue reading %s