Top Loan Modification Questions ~Answered~
The loan modification process can be very frustrating and complicating for homeowners who are not familiar with loan modification programs. The first step a homeowner should take prior applying for a loan modification is to gather up as much information as possible. The key is to be prepared for every circumstance that may be thrown at you. Preparation is always key when successfully negotiating a loan modification. To help you better understand loan modifications, here are 10 of the most asked questions regarding loan modifications:
What is a loan modification?
A loan modification is a permanent change of one or more terms on a borrows mortgage agreement resulting in reduced mortgage payments that the homeowners can now be able to afford.
Can My Lender Include Late Charges On My Loan Modification?
The new federal loan modification programs mandate that the banks waive any administrative charges, penalties, and late fees and when offering a loan modification.
How Will The New Government Loan Modification Programs Help Me Get Approved For A Loan Modification?
The Federal government has allocated $75 billion dollars in their new loan modification programs to give lenders and services a monetary incentive to offer help to qualified borrowers. In addition, homeowners who stay current on their newly modified monthly mortgage payments will be eligible for a $5000 credit on their mortgage balance.
How Do You Know If You Are Eligible For A Loan Modification?
The most important requirement for a loan modification is that you can prove that you will be able to afford to pay your newly modified mortgage payments. You will prove this to your lender by supplying income worksheets and financial statements. It’s very important to your lender that you do not default again on your mortgage payments because they would have just wasted all that time and money for nothing.
Do I Need To Be Late On My Mortgage Payments To Qualify For A Loan Modification?
Under the Homeowners Affordability Modification Plan, lenders will receive a special incentive for assisting homeowners who are not yet delinquent on their mortgage, but soon will be. The purpose of this plan is to help homeowners before they default on their mortgages. The burden of proof for proving that you can no longer afford your current mortgage payments seem to be higher for homeowners who are still current on their mortgage payments. The reason is lenders need to make sure they aren't spending the time helping a homeowner who is just looking to lower their mortgage payments for the hell of it...
What Qualifies For An Acceptable Hardship Situation?
Every homeowner has their own unique set of reasons that has caused them to be delinquent on their mortgage payments. For this reason, there is no set in stone answer to this question. The most common reasons for an acceptable hardship are: loss of job, single parent, reduced income, death in the family, etc... A compelling hardship letter is a very important factor in the loan modification process. Click here for more information about how to write a hardship letter.
Will a Loan Modification Stop Foreclosure Proceedings On My Home?
Yes once your loan modification is finalized and your payments are now deemed current, the foreclosure process will stop.
Can The Balance Of My Missed Mortgage Payments Be Added In After My Loan Modification?
Yes your lender can spread the balance of your missed mortgage payments over the duration of your mortgage loan to bring your mortgage current. This can or cannot happen depending on what mortgage terms you negotiate during your loan modification.
Can I Do A Loan Modification Myself Or Should I Hire Someone To Do It For Me?
It all depends on if you think you have the knowledge to successfully complete a loan modification by yourself. There are many resources available to homeowners seeking to complete a loan modification their self.
How Do I Get Started On My Loan Modification?
Before you contact your Bank for the first time, you should do your homework and read through our Do It Yourself Loan Modification kit.
President Obama's Homeowner Affordability Act offers real help for homeowners who qualify for the plan. All homeowners are encouraged to see if they meet the standards of this government loan modification program. While a large portion of struggling homeowners may not qualify for this plan, those who do will greatly benefit and save their homes.
Download our free loan modification kit if you are planning on approaching a loan modification on your own. Since loan modifications have become so popular in the last few years, the process is becoming more simple and automated. Once you learn how to do the process yourself you will wonder why you ever considered paying for a loan modification service to assist you. There aren't any "secrets" they know that you cannot do yourself.
