A loan modification is an affordable option as it can change the terms of your mortgage. But, it can also affect your credit score. This is helpful in case you are behind on paying a loan or a mortgage.
A mortgage loan modification is also the best way to avoid the loss of your home when you are not able to make payments monthly. Instead of defaulting on a secured loan, mortgage loan modification is a good choice.
What is a loan modification?
A loan modification is nothing but changes in terms of your loan. On the other hand, loan refinancing is the replacing of your loan with a new mortgage.
Modifying a mortgage loan can help you avoid foreclosure by adjusting the time period of the loan, lowering the interest rate, etc. all in all, the loan modification can change the original loan and help you with easy payments of the loan.
Who qualifies for a loan modification?
Keep in mind that not everyone can qualify for a loan modification. If you own a home and face difficulty paying a mortgage loan, you must either be delinquent or facing imminent default.
And, the reason for imminent default can be a loss of a job, serious illness, etc., that affect your ability to repay the loan on the original terms.
Should I consider the mortgage loan modification option?
There are some conditions when you want loan modifications. You should be delinquent on loan for at least 60 days. In addition to this, you can consider modification of loans when you have bad credit. It is because the lower payments can help you maintain your finances.
The paperwork for a loan modification can be a little complex. And, if your circumstances are not favorable, and you risk losing your home, the process can be frustrating as well.
Some fake agencies can prey on consumers struggling to pay the loan amount. So, if any company calls you, confirm with the Consumer Financial Protection Bureau if it is real or not.
Last but not least, the loan modification may be noted on your credit report. So, if you want to choose this option, you need to be very careful with it. And, if your financial situation is tough enough, paying the loan over a longer period, with more interest, is a better option than losing a house.
How to modify your home loan?
There are many ways to get your mortgage loan to modify:
Reduce the interest rate: One of the ways is to reduce the interest rate on mortgage loans. It can reduce your monthly loan payments by hundreds of dollars.
Increase the length of term: Extending the length of a loan is also another way of loan modifications. This will also decrease your monthly loan payments. But, in this case, you will have to pay more interest over the long period.
Roll late fees into the principal: Lenders may enroll your late fees to your principal and modify the loan. It means the total amount you owe will be spread out over time with the new principal.
Consult a bankruptcy attorney today!
We provide a range of bankruptcy, debt, and loan modification services. Our skilled and professional lawyers can handle everything with ease. Also, we are here to offer you the best suggestion according to your financial condition for mortgage loan modification. You can check our attorney profile and can know more about us. We are here to help you with any loan modification needs.