What is a Home Loan Modification?
According to the Financial Dictionary, a modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.
What does this means for you?
If you qualify for a loan modification because of a hardship then this will help you get back on your feet. The unemployment rate in America is close to 10%. If you have lost your job and can no longer pay your high mortgage bill, consider applying for a
loan modification. There is no catch or loophole with a loan modification. You get a lower payment as mandated by the government from you lender. Any way you look at it, a home loan modification saves you money. In most cases it also stops foreclosure if you keep the newly set up payment plan. If you are already in foreclosure, after being approved, the bank will set up a 6 month to 1 year trial period. In that time if all the payments are kept, then the home loan modification becomes permanent.
How do I know if I qualify?
You may have an easier time to qualify if you have experienced financial hardship or you have missed at least one monthly mortgage payment (we are not recommending that you miss any of your mortgage payments). If youre at risk of defaulting or foreclosure or your monthly mortgage payment is higher than 31% of your monthly gross income before the loan modification. And last, if you have a loan-to-value ratio (mortgage loan amount divided by appraised value of property) thats higher than 100%.
What is the first thing I need to do?
Call your lender and make sure they participate in the Making Home Affordable program. This program is provided to 80% of all service lenders and it may be difficult to go through these steps of the program to qualify, but the results are great. You get to keep your home and you will get your loan modified so your house payments can be more affordable to you.
For more information, please visit
http://www.mycaal.com/
