Loan Modification to Avoid Foreclosure
What Is a Loan Modification?
To keep things simple, a loan modification is when the terms of a loan are changed. This concept can apply to any change made to any loan, but most of the time, it’s used to alter monthly payments on a mortgage.
More often than not, mortgage loan modifications are negotiated to prevent foreclosure. Many circumstances can contribute to foreclosure, but once you’re up against that wall, you need help. That’s what the loan modification is intended to provide.
At Foreclosure Advocates, we can help you determine if pursuing a loan modification is the right path for you, and we can also connect you with a reliable loan modification expert. We’ll give you the tips and tricks necessary to give you the best shot at getting a mortgage loan modification. Contact us today to learn more.
Mortgage Loan Modification Requirements
Not all mortgages can be modified — you have to meet specific conditions to qualify. Those conditions will vary by state and lender, but there are some basics that are fairly universal.
For starters, you have to be delinquent on payments or facing imminent default to even try for modification. This is a technique intended to help people who are in the most need.
Simply being unable to pay is not usually good enough. Loan modifications are designed to help people in unusual circumstances deal with unexpected problems. A modification is most likely to be approved if the default is due to the loss of a job, the loss of a spouse, illness, or disability. If something happens that affects your ability to pay in this manner, you have a shot at getting a modification.
You further improve your chances of getting a modification by seeking help. There are groups and agencies that offer assistance with this process. Additionally, if you got your mortgage through a government assistance program (such as through the FHA, USDA, or veterans assistance), they will likely offer you assistance in dealing with your impending foreclosure. That help often includes pursuing loan modifications.
What Happens After a Loan Modification Is Approved?
After a loan modification is approved, the terms of the loan change. For the most part, this usually means you have a new monthly mortgage payment. It probably also means that the total amount that you will have to pay on the loan is different. Those are the perks.
It’s important to understand that loan modifications are customized to the situation. They might be temporary changes contingent on your financial situation. Even permanent modifications can be conditional. It’s common for the lender to require you to make consecutive on-time payments in order to lock in the new terms.
That said, a loan modification can hurt your credit score. Whether or not this is the case largely depends on the terms of the modification. It’s important to understand that when you receive a modification, you are technically failing to fulfill the terms of a loan. That lowers credit scores — but not by as much as having a house foreclosed upon.
What Do I Do If I’m Denied a Loan Modification?
Being denied a loan modification is not a good feeling. You didn’t go this route because you were in a good situation from the start. While it might feel like the end, a loan modification is only one of several options available to a person facing foreclosure.
While this can feel like a setback, you still have other options on the table. In fact, loan modification is often only the first step people take. Even though that didn’t work, you can try the next item on the list.
If you are denied a loan modification, return to the team at Foreclosure Advocates. We can help you determine if declaring bankruptcy or selling your house are good options for you to pursue.
Apply for a Loan Modification
At Foreclosure Advocates, we can help you apply for your loan modification. Expert help can go a long way toward helping you get the modification you’re pursuing. Contact us and we’ll provide you with the resources necessary to improve your chances of a mortgage loan modification. We’ll also discuss alternative options with you. Before you go into your modification process, you can have a complete plan for tackling foreclosure and coming out as far ahead as possible. Give us a call today or fill out our online form to get started.