How Does a Mortgage Loan Modification Work? A mortgage loan modification is the process by which an individual who can no longer make their monthly loan payments can apply to their lender for a modification of the original loan.
The lender may restructure the loan by changing the terms.
What I mean is, your lender could change the interest rate, lengthen the time you have to repay the loan, forgive any late fees or any combination of these.
These changes will often lower the monthly payments in order to keep you in your home.
Many individuals experience some sort of hardship leading to the need for a mortgage loan modification: bankruptcy, loss of a job or loss of finances due to the failing economy.
By submitting what is called a hardship letter, which is a letter explaining exactly why you are having trouble with your mortgage, your lender could review your situation and decide to proceed with the modification.
The purpose of these changes is to help make your monthly payments more affordable.
Usually your lender will grant a permanent rate reduction, which would fix the interest rate for up to five years depending on your lender.
At times foreclosure may be unavoidable, but a large number of people have been able to stop or avoid foreclosure by making their home mortgage loans more affordable.
By having a mortgage loan modification service work with their lender to modify the terms of their loans, many families have been able to avoid the stress and strain of dealing with their lender, as well as the time consuming paperwork and phone calls which need to be dealt with.
While loan mod can be a great option, working with a loan modification service will help you avoid researching the new laws and regulations which must be followed in order to have you application approved.
Many of you may not realize the amount of work it will take to have your application approved but these specialists do.
You must be made aware of the problems that could arise if your application for a mortgage loan modification is denied for any reason.
Some individuals have been simply denied for small errors in their documentation.
It would be wise to have an expert on your side because once denied, it is increasingly difficult to get approved when applying for a second or third time.
The good news is many reputable loan modification specialist offer free consultations to help you obtain your approval in a timely manner.
Their valuable resources and dependable advice can help to make your experience less stressful and positive.