Struggling to make your mortgage? Worried about foreclosure? If you’re a homeowner and that mortgage is daunting to pay every month, a loan modification may just be your saving grace. With a loan modification you can make permanent or provisional changes to your loan, avoid default and foreclosure and stay in your home. Here’s what you need to know… Loan modification In simplest terms, a loan modification is a change to your original mortgage. This change, or modification, will usually come about because of a financial hardship and the end goal is to lower the amount you have to pay each month. Most loan modifications will work by: reducing the interest rate, changing the interest rate from variable to fixed, forbearing some of the principal balance or extending the length of the loan term. Your past-due bills are usually added to the unpaid principal as part of the arrangement. How to get a loan modification Banks and lenders are often willing to help you negotiate a loan modification because it’s in everyone’s best interest. You will avoid the costly, emotionally and financially damaging process of a foreclosure. The bank will avoid a number of more tedious and ugly options such as foreclosure, a short sale, collecting the money through wage garnishment, bank levies or collection agencies, charging off the loan or losing the ability to recover funds altogether. You’ll need to prove a few things to get the modification. First, that the home is your primary residence. Second, that you’ve gone through a financial hardship. And lastly, that you have a steady income to make mortgage payments under the new agreement. Depending on your state, situation and circumstances, you could qualify for a number of loan modification programs. Here is an extensive list of programs but you can contact your lender’s loss mitigation or home retention department directly to hear about the options available to you. If you need help understanding your rights or if your lender has violated the law in any way, you will want the services of a professional foreclosure defense attorney who knows the ins and outs of the system and can get you the best terms possible on your loan modification. Additionally, if you don’t understand the application or have a complex situation, a lawyer may be helpful. Contact Jacobs Legal today to help you negotiate the best terms for your loan modification.Using a Loan Modification to Avoid Foreclosure
