Loan Modifications - The 5 Eligibility Requirements

Home Loan Modification is the process of modifying the terms and conditions of the mortgage loan, under a mutual agreement between the mortgagor and the mortgagee. The $75 Billion bailout was offered under the management of FDIC as part of the Obama Loan Modification plan-invoked during early March, 2009.

Who is eligible for Home Loan Modification?

- Homeowners should be undergoing serious financial hardships like loss of income, unavoidable expenses, etc.

- The Property should be the primary house of the homeowner

- The amount the property owner owes should be less than $729,750.00

- The borrower should have taken such current mortgage before January 4, 2009

- The payment on the first mortgage is more than 31% of the current gross income- this includes principal, interest, taxes, and insurance and homeowner's association due

Importance and Advantages of Home Loan Modification

Loan modification will be the only systematic tool a borrower should take to tackle threats arising due to various foreclosure reasons.

- Lenders get their business going as they continue to have a relationship with a positive response from the borrower expressing their intent to repay an agreeable debt

- Option of Repaying with low interest rates - is the biggest benefit and an opportunity to utilize as the decrease could be down to 2%. This will in turn result in lower monthly payments

- Deferred Payments - is another option where the past due is spread across the next few months so that the late payment fees and any other default service charges are waived

- Principal Reduction - is another likely option when the value of the asset is decreased and is worth less in the market in comparison to the outstanding amount to be paid by the borrower. In this case, an agreement is made to revise the principal and the interest rate. The repayment structure is defined for the revised principal amount

- In case of foreclosure, the borrower loses the appreciated value of the home, but after modification of the loan, the borrower owns the property with market appreciated value

- Home owners who foreclose will not be entitled to make use of the interest they pay for tax deduction when they file returns - which they are now entitled after Home Loan Modification

- Will boost the borrower's credit report hugely and will have positive effects in improving credit scores

- Change in the repayment period - increasing the number of monthly payments will decrease the monthly due which in turn will give in some breathing space for the borrower

Although different companies have their own rules and regulations, all have to adhere to the above mentioned guidelines.

About the Author:
For detailed information on how to obtain aMortgage Modification, visit MortgageModificationtips.com.

Article Originally Published On: http://www.articlesnatch.com

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, mortgage modification

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