Home Loan Modification

Posted on July 4, 2011 by Loan Modifications Admin

Because of the economic climate in the United States, many homeowners are having trouble paying their mortgages and are looking for relief through a home loan modification. Read this brief overview to discover whether obtaining a home loan modification might be an option for you.

What is a Home Loan Modification?
Often called a mortgage loan modification, this is an adjustment in your loan so that the monthly payment is reduced to a level that you are able to pay. This adjustment or modification can be achieved by modifying your loan in one or more ways. Your loan may be extended so that it is paid back over a longer period of time, effectively lowering the amount due each month. Your interest rate may be lowered, causing the amount of interest due each month to be less and reducing your payment. In some cases, your actual principal may be reduced which will also lower your monthly payments.

Who Qualifies?
A home loan modification is similar to refinancing your mortgage but is usually only available to those who would not qualify for a traditional refinance because of their financial situation. Here are the standard criteria to be eligible for a home loan modification:
• You have experienced a verifiable financial hardship such as loss of a job, reduction of hours, large medical bills, etc.
• You are at least 3 months behind in your payments, but have not fallen behind purposefully in order to qualify for a home loan modification.
• You have made a legitimate effort to make payments and currently have enough income to make a lowered payment.
• You have not filed for bankruptcy.
• You are able to document your income loss and current income through tax returns or pay stubs.

Will Your Credit Score Fall?
Credit experts say that your credit score will fall in the short term if you obtain a home loan modification but that the damage to your credit will be less than if you were to continue to miss payments and eventually lose the home through foreclosure. The short-term negative effect on your credit score will be overcome as you stay current with the new home loan modification payments. The bottom line is that if you are unable to pay your current loan amount, receiving a mortgage loan modification may actually save your credit score in the long-term.

Where Do You Start?
Many homeowners begin as you have by researching the facts online. The next step may be to contact your lender and ask for information on obtaining a home loan modification. They will send you a packet of information with forms and a checklist of the documents you need to gather.
Some homeowners find that their lenders are unresponsive or slow in replying to their requests. The homeowner’s financial crisis and stress deepens waiting for the lender to act. Because of this scenario, many of those who are struggling to pay their mortgage are using third-party home loan modification services that have a track record of making the process go more quickly, more smoothly and in many cases more successfully. These home loan modification experts pre-qualify their clients to essentially ensure that they will be able to receive an adjustment to their loan and there is usually no fees for applying.

The key is to get started now so that your financial hardship can be turned around as quickly as possible. Explore your options and begin the process of bringing your financial situation under control.

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Loan Modification Help

Posted on July 1, 2011 by Loan Modifications Admin

Many homeowners have heard about the new loan modification programs but don’t know where to start in finding loan modification help. For many Americans, it begins with understanding whether or not they qualify for mortgage loan modification help. There are several basic criteria that must apply to successfully receive a home loan modification.

First, you must be experiencing financial hardship. Have you lost your job or have your hours been cut back at work? Were you relying on child support to help make payments but it has ceased? Do you have mounting medical bills? These are just 3 of many reasons that may allow you to receive loan modification help.

Secondly, you must be behind in your loan payments by at least 3 months while showing that you have made an honest effort to make payments. In other words, falling behind on purpose in order to qualify may prevent you from receiving the loan modification help you need.

Thirdly, you must live in the home and it must be your primary residence. Mortgages on rental properties are not eligible for loan modification help.

Fourthly, you must have enough current income to make payments on a modified loan. If your financial situation has become so dire that you are not able to make even a reduced payment, then mortgage loan modification is not an option. However, even if you are uncertain about your ability to pay a revised amount, financial experts suggest you apply. It generally costs nothing to complete an application and fees are only added if your application is accepted.

If that brief checklist applies to your situation, then the possibility is quite high that you will qualify for a home loan modification from your lender.

If you have decided to pursue loan modification help, then you have an important choice to make. You can pursue the application process and negotiations with your lender on your own or you can seek the assistance of one of the companies that specializes in helping their clients obtain the relief they desperately need. Many homeowners are successful in working directly with their lender but in some cases their application is denied for reasons other than strictly financial ones.

Homeowners who have chosen to seek the assistance of a home loan modification specialist report that the process was fast and easy. In addition, studies show that these companies have a very high success rate in getting their clients approved for loan modification help because they know exactly how to go about the process. In many cases, these companies have already established a line of communication with the lender and know who to speak with and how to go about expediting the process so that the homeowner can get the relief they need and sleep easy once again.

Most companies that offer loan modification help pre-qualify potential clients by going through a very detailed list of criteria. They determine whether a client is a good candidate for loan modification help and whether their application is likely to be approved. Typically, no fees are paid by the homeowner until it has been established that they will receive the help they are looking for. If you think you may be a candidate to get a home loan modification, it makes good financial sense to explore your options. You may find the assistance you need in receiving loan modification help in a very short period of time.

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How to Avoid Loan Modification Scams

Posted on June 26, 2011 by Loan Modifications Admin

Are you looking for information on how to avoid loan modification scams? With the rise in homeowners seeking home loan modification help there has been a tremendous increase in those seeking to turn other people’s need into their fraudulent gain. Loan modification scams are common now and homeowners seeking help in modifying their loans need to know how to avoid loan modification scams.

Despite a crackdown by state and federal authorities, along with educational websites that seek to teach consumers how to avoid loan modification scams, scam artists continue to proliferate. According to mortgage loan modification experts, here are some of the most common signs that a person offering loan modification help may indeed be attempting to defraud you.

1. They make unreasonable promises. These include the promise to have your interest rate eliminated entirely or the claim that they can have your principal cut by 50% or more. Some loan modification programs will reduce your interest rate or your principal but not by these levels.

2. They ask for fees up front. Legitimate home loan modification companies do not require you to pay them any fees until your loan modification has been approved by your lender.

3. They cannot show you a license or prove that they are a legitimate business with proven success.

Tips on How to Avoid Loan Modification Scams
Being educated is the best defense against being scammed. These tips will help you know how to avoid loan modification scams.

1. Never pay upfront fees to any company promising to get your loan modified. The law in most states forbids companies that offer loan modification help from collecting money before services are provided.

2. Do not make a mortgage-type payment to any company other than your lender. Some scam companies claim that they will keep the payments in escrow until your loan is modified and then they will refund the difference to you. This is not a legitimate way to make your loan payments.

3. Do not transfer title of your home to a company. Some fraudulent companies claim that they will rescue your home for you and refinance your loan with them.

4. Never sign documents without reading them thoroughly. Illegitimate companies may try to take your home this way or lock you into a long-term financial arrangement with them that will be devastating to you.

Finding Help You Can Trust
Once you know how to avoid loan modification scams you can go on to find the help you need in getting a home loan modification. Ask the company you are considering to go over their process with you and if it entails any of these warning signs look for another one. Ask for references of clients they have helped. Find out about their legal business credentials and check with the Better Business Bureau to see if complaints have been made against them.

If you know how to avoid loan modification scams then you can be successful in finding the help you need to get back on solid financial footing. It’s the key to having your mortgage loan modification approved and saving your home for you and your family.

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Mortgage Loan Modification

Posted on June 23, 2011 by Loan Modifications Admin

Many homeowners are considering applying for a mortgage loan modification and are eager to find out more about how it may benefit them and what is involved. In this guide to mortgage loan modification we will cover the basics so you can decide if pursuing one is right for you.

A Working Definition
A mortgage loan modification is a permanent adjustment to the amount of your loan payment, your interest rate, or both. A mortgage loan modification is very much like refinancing a home loan and is sometimes termed a modified refinance. In some instances, the amount of principal owed on the home will also be reduced. The specifics of the modification that you as a homeowner receive depends on the program that you qualify for and select. The essential reason that a mortgage loan modification is attractive is that it lowers your monthly payments to a level that you can afford, allowing you to stay current in your mortgage without risk of default and foreclosure.

When Modifying is an Option Versus Refinancing the Loan
For some homeowners, refinancing their current loan remains an option. Unfortunately, many homeowners have fallen significantly behind in their loan payments or have suffered a life experience such as the loss of a job. These events may mean that they no longer qualify for a standard mortgage refinance. If you have had financial setbacks that have altered your financial situation it is likely that a mortgage loan modification will be a better option – or perhaps your only option—to avoid defaulting on the loan.

Who is Eligible for a Loan Modification?
Not everyone will qualify for a mortgage loan modification. The qualifications for most lenders and government programs are quite similar. Here are the criteria that most use.
1. Documented financial hardship such as the loss of a job.
2. At least 3 months behind in your mortgage payments.
3. Have not filed for bankruptcy.
4. Own the property and use it as your primary residence.
5. Are cooperative with the agent handling the mortgage loan modification.
6. Have not purposely missed payments for the purpose of obtaining a modification.

Getting Started
If you believe that you may qualify for a mortgage loan modification you will need to work out the details with your lender. Many consumers work directly with their lender. However, there are many third-party services that provide help to homeowners seeking to expedite the process and increase their chances of successfully receiving a mortgage loan modification. These loan modification services will often have a comprehensive list of programs that are available and can help you decide which ones to pursue.

When you approach your lender or a third-party service be prepared to show them that:
1. You have a documented financial hardship.
2. You have made efforts to make payments but that it is no longer possible.
3. You are not purposefully missing payments in order to qualify.
4. You are being forthright and cooperative while looking for a solution to your situation.

The good news is that the majority of homeowners will indeed qualify for one of the current mortgage loan modification programs being offered by their lender and backed by the federal government.

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Loan Modification Programs

Posted on May 31, 2011 by Loan Modifications Admin

If you have fallen behind in your mortgage payments, or are at risk for doing so because of financial hardship, there are loan modification programs that may allow you to make lower payments and keep your home. While these programs have been available from some lenders for several years, as of February 2009 most loan modification programs are backed by the federal government and are offering hope and help to a far greater number of American homeowners.

HAMP and Lender Programs
Most lenders have in-house loan modification programs to offer their clients. Since most loans from these lenders are backed by government funds, most of these loan modification programs are as well. In addition to these lender-provided programs, the federal government does have a program in which many lenders participate. It is called H.A.M.P., or the Homeowner Affordable Modification Program. It essentially reduces the homeowner’s monthly payment to 31% of their income and achieves this number by lowering the interest rate, extending the length of the loan, and in some cases reducing the amount of the principal.

Qualifying for Loan Modification Programs
How do you know if you’ll qualify for one of these loan modification programs? While each program has its own specific criteria, certain things are common to them all. You must have experienced a verifiable financial hardship such as the loss of a job or the reduction of wages at your job. You must also be behind on your current loan, though falling behind just to qualify isn’t acceptable. Most loan modification programs won’t consider you unless you are at least 3 months late on your payments. The home for which you are seeking to have the loan modified must also be your primary residence. If these factors are part of your current situation then it makes good sense to seek to obtain the benefits of one of the available loan modification programs.

Potential Disadvantages Offset by Benefits
There are several possible disadvantages of entering loan modification programs. For example, your credit report will show that your loan was modified. However, this will have far less impact on your credit score than continuing to miss payments and eventually losing the house through foreclosure. In addition, there are fees associated with joining one of these programs but again, the money you save from reduced payments will quickly make up for the fees you pay.

DIY Loan Modification or Seeking Help?
Pursuing one of these loan modification programs with your lender is something you can do on your own. Many homeowners are successful in obtaining a modification by working directly with their lender. However, studies have shown that using a company skilled in getting clients approved for loan modification programs leads to success in a higher percentage of cases. Because they have a relationship already established with the lender, and because they provide the homeowner with a very clear checklist of what needs to be done, the length of the process is usually much shorter when using a third-party loan modification service.

Many American homeowners are experiencing financial crises that are putting their homes at risk. These loan modification programs are available to help you recover from your financial hardship and maintain the home you worked so hard to get.

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