Loan Modification: Should I?

If you have been getting behind on bills and finding it more difficult to afford your mortgage payment each month, you may want to consider a loan modification to help you make your payments more affordable and allow you to avoid foreclosure so you can keep your home. You may be eligible for a loan modification if you are still current on your  payments but realize that you may be heading toward trouble. Even if you have missed a payment, you may still qualify. Your mortgage lender is the one that will be able to qualify you for a loan modification but generally if you can provide proof of income and the ability to make on-going payments each month, you might have a good chance at getting assistance.

The Obama Administration has created a Financial Stability Plan that was meant to stabilize the housing market and allow American homeowners to have options for reducing their monthly mortgage payments to something they can afford. The Home Affordable Refinance Program was created to help homeowner’s with loans owned by Fannie Mae or Freddie Mac refinance their mortgages for more affordable payments.

Call Your Lender

If you are struggling to make ends meet and are worried about the risk of foreclosure but are still in good standing, you might want contact your mortgage lender and find out if you qualify. However, if you plan to go the loan modification route, you need to be extra careful about what you are signing. Renegotiating your loan terms can be beneficial but if you don’t pay careful attention, you may find that you will end up paying way more money than you need to over time. If you get yourself into another loan that you can not pay for, you will likely end up losing your house for good and risk your credit history. When a bank modifies a loan, the original contract is looked at so the original interest and mortgage amount can be reduced. If you are not familiar with banks and their contract terminology, you should do your homework. It may seem tedious to read through the contract in its entirety but it is important. There is a good chance when your original contract was prepared, there are points that relate to what would happen in the even you could not afford the original payments. If this is the case, during the renegotiation process, if you find that your lender does indeed have parts that contain references to this, due in part to greedy lenders, you should take the steps to have these potentially fraudulent points removed before signing for the modification.

Stay on Top of Things

If your original contract is not completely on the up and up, you need to remained informed and know what you are getting into. A loan modification can certainly help solve the problem of payments that are too high and may even put some cash back in the bank for you. Consider all of your options before following through and stay far, far away from loan modification programs that are not legitimate. Like with many things these days, there are many scam programs and con artists who are not in business to help you avoid foreclosure but are all too happy to take your money and run. They pray on desperate homeowners who are willing to do anything to save their homes. They are infamous for asking for upfront fees for counseling services or even for the actual loan modification services. There are companies that ask you to sign over the deed to your home immediately or convince you they can save your home only if you sign papers right away. Also, make certain you are never paying your mortgage payment to anyone but your lender. Your mortgage company is the only one you should be working with to get a loan modification, otherwise you risk getting taken for a financial ride that could ultimately cost you your home.