A loan modification may be right for you if you are experiencing a hardship or facing foreclosure.
A foreclosure can be postponed while working with your lender to find a loan modification solution, once approved your loan is brought current and the foreclosure is halted.
Something you should know is there are 4 main types of loan modifications, when discussing a loan modification with the lender it is important you understand the differences and which modification can give you the greatest benefit and how it will affect you in the short and long run.
First you have what is called the Straight Capitalization Loan Modification; this modification is where delinquent interest is added to your principal balance and is amortized over the existing term and interest rate.
This will cause an increase in the homeowner's monthly mortgage payments.
The straight Capitalization Loan Modification is not a good option for the homeowner that is facing a long term hardship and is struggling to make their monthly payments.
In my opinion this is the worst modification available.
The homeowner would have to qualify for this modification proving they would be able to afford the increase in payments.
Second is the Loan Modification with Term Extension; this modification extends the loan terms (the length of the loan).
In most cases the delinquent interest is added to your principal balance, the term of the loan is extended a certain amount of months or years thereby reducing your monthly payments and making them more affordable.
For example, a homeowner that had a thirty year mortgage and 25 years remaining could extend the term to 40 or more years.
There can be many benefits to this type of modification; it can help you achieve the lowest monthly payment, lower payments may protect you in the event of future financial crises.
If you become stable and are in the position you can always pay extra towards the principle to lower the balance and providing there is no prepayment penalties shorten the term of the mortgage.
Third is Step Rate Modification; this could be a good fix for a short- term hardship or problem, this modification is where the interest rate on your mortgage is lowered a maximum of 3% temporarily.
A typical step rate mortgage reduces the interest rate by one percent for every year of the step rate plan (for a maximum of 3 years and a total of a 3% reduction).
After the first year with a 3% reduction the rate begins to rise until it reaches its original rate.
Fourth is a Reduced Rate Loan Modification; this is a permanent reduction in the interest rate of your mortgage to make payments more manageable for the remaining term of your mortgage.
Keep in mind the rate reduction can only go so low or it won't make since to the lender.
Another option a lender may consider is a combination of the above modifications.
For example extend the term and reduce the interest rate to accommodate an affordable mortgage payment for the homeowner.
There is a lot of controversy surrounding Principle Reduction Loan Modifications; this is where your principal balance of the mortgage is reduced thereby reducing what you owe and lowering your monthly payments.
Although lenders are rarely considering this type of modification, depending on your circumstances it may be beneficial to see if you qualify for a Principle Reduction Loan Modifications.
A complete comprehensive loan modification package can make the difference of being approved or denied for a loan modification.
Just as thousands of homeowners already have, you can easily and successfully apply for and receive a loan modification on your own.
There are many benefits associated when applying for a loan modification on your own; you will save the fees associated of hiring someone to do a modification for you, there is no chance of getting scammed, you are in control, you will not get lost in the crowd of an overwhelmed negotiator, and you will always know where you are in the process at all times.
We estimate at least 90% of denials are due to an incomplete file, the budget was improperly presented, or there were no comparisons to aid the lender in evaluating what was in their best interest a loan modification or foreclosure.
Remember you are not alone thousands of homeowners are in the same position as you are in, no matter what you decide to do always keep open communications with your lender.
For information on how you can develop a complete comprehensive bank ready loan modification package in minutes, visit our website http://www.
diyforeclosurehelp.
com for easy step by step tutorials to an affordable proven online software program that incorporates the same tools and forms as the loss mitigation firms and attorneys use to develop bank ready loan modification package.
A foreclosure can be postponed while working with your lender to find a loan modification solution, once approved your loan is brought current and the foreclosure is halted.
Something you should know is there are 4 main types of loan modifications, when discussing a loan modification with the lender it is important you understand the differences and which modification can give you the greatest benefit and how it will affect you in the short and long run.
First you have what is called the Straight Capitalization Loan Modification; this modification is where delinquent interest is added to your principal balance and is amortized over the existing term and interest rate.
This will cause an increase in the homeowner's monthly mortgage payments.
The straight Capitalization Loan Modification is not a good option for the homeowner that is facing a long term hardship and is struggling to make their monthly payments.
In my opinion this is the worst modification available.
The homeowner would have to qualify for this modification proving they would be able to afford the increase in payments.
Second is the Loan Modification with Term Extension; this modification extends the loan terms (the length of the loan).
In most cases the delinquent interest is added to your principal balance, the term of the loan is extended a certain amount of months or years thereby reducing your monthly payments and making them more affordable.
For example, a homeowner that had a thirty year mortgage and 25 years remaining could extend the term to 40 or more years.
There can be many benefits to this type of modification; it can help you achieve the lowest monthly payment, lower payments may protect you in the event of future financial crises.
If you become stable and are in the position you can always pay extra towards the principle to lower the balance and providing there is no prepayment penalties shorten the term of the mortgage.
Third is Step Rate Modification; this could be a good fix for a short- term hardship or problem, this modification is where the interest rate on your mortgage is lowered a maximum of 3% temporarily.
A typical step rate mortgage reduces the interest rate by one percent for every year of the step rate plan (for a maximum of 3 years and a total of a 3% reduction).
After the first year with a 3% reduction the rate begins to rise until it reaches its original rate.
Fourth is a Reduced Rate Loan Modification; this is a permanent reduction in the interest rate of your mortgage to make payments more manageable for the remaining term of your mortgage.
Keep in mind the rate reduction can only go so low or it won't make since to the lender.
Another option a lender may consider is a combination of the above modifications.
For example extend the term and reduce the interest rate to accommodate an affordable mortgage payment for the homeowner.
There is a lot of controversy surrounding Principle Reduction Loan Modifications; this is where your principal balance of the mortgage is reduced thereby reducing what you owe and lowering your monthly payments.
Although lenders are rarely considering this type of modification, depending on your circumstances it may be beneficial to see if you qualify for a Principle Reduction Loan Modifications.
A complete comprehensive loan modification package can make the difference of being approved or denied for a loan modification.
Just as thousands of homeowners already have, you can easily and successfully apply for and receive a loan modification on your own.
There are many benefits associated when applying for a loan modification on your own; you will save the fees associated of hiring someone to do a modification for you, there is no chance of getting scammed, you are in control, you will not get lost in the crowd of an overwhelmed negotiator, and you will always know where you are in the process at all times.
We estimate at least 90% of denials are due to an incomplete file, the budget was improperly presented, or there were no comparisons to aid the lender in evaluating what was in their best interest a loan modification or foreclosure.
Remember you are not alone thousands of homeowners are in the same position as you are in, no matter what you decide to do always keep open communications with your lender.
For information on how you can develop a complete comprehensive bank ready loan modification package in minutes, visit our website http://www.
diyforeclosurehelp.
com for easy step by step tutorials to an affordable proven online software program that incorporates the same tools and forms as the loss mitigation firms and attorneys use to develop bank ready loan modification package.
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