When homeowners are not able to make their house payments without difficulty, it is time to start looking for options to get rid of debt or reduce current expenses. There are several ways to do this, and one of the most well-known options is to file for bankruptcy. Bankruptcy is a great tool for getting out of hand finances under control, but it is not the only option. Another idea to think about is debt consolidation, which is a good way to wrap all of your monthly bill payments into one lump sum each month. In some consolidation cases you might even be able to pay less than the full balance due, which can significantly reduce your overall debt load. Refinance and modification of mortgages are also good ways to curb expenses, and it is important to know the difference between the two.
If you want a new mortgage you can get one by refinancing your current mortgage, just with a new lender. Or, you can ask for your existing mortgage holder to change the terms of your loan by modifying the note. A refinance requires you to apply for a new loan with a new bank, and essentially go through the entire loan process again. But this time around the lender will not loan the full balance, so you will need to have some equity in your home for a refinance to work. With a modification, you will not have to worry about equity or having your home appraised because the loan is changed by the current mortgage lender. But do you have to be current on payments for a modification or refinance? Here are some basics:
● For a refinance to work you should be relatively current on your payments. If you are not it can be harder to get a bank to work with you, because the risk of nonpayment will appear too great.
● In a modification most lenders will begin negotiations once you fall behind on your house payment, and contact them for solutions. This is not to say default is a requirement all of the time, but is common in most cases.
Deciding on what to do to get a new mortgage requires careful consideration of several factors. Only you know what facts apply to your situation, and we can help sort through the data and come up with options for your consideration. The approach we take involves providing you with a thorough explanation of all available remedies, so you are satisfied with your final choice.
If you are considering modifying your mortgage, or want information on other options, contact us at www.DsouzaLegalGroup.com.