Loan Modifications: Too Good To Be True?
What is a loan modification?
A bank loan modification is a change in terms to a loan agreement, agreed to by both a borrower and lender. For home owners, this becomes a good option if the home owner is behind on payment or has the potential to default on his/her loan. For a lender, this becomes a good option because it prevents the potential loss incurred to the bank from a borrower unable to make payments. In order to restore the potential loss of income from the loan, the lender agrees to a new set of terms.
What are the benefits of a loan modification?
For many reasons, loan modifications are beneficial. Unlike other options for home owners struggling to make their payments, a loan modification alone does not affect your credit score. Furthermore, typically a change occurs in which a modification in the interest rate, loan term, loan amount, or monthly payment is achieved which may be beneficial in making a home owner’s mortgage payment more affordable.
What are the drawbacks of a loan modification?
Although many times neglected, there are some negatives to a loan modification. The criteria for a loan modification have become more and more stringent over the years, resulting in less and less modifications being approved. Furthemore, a loan modification can be a very long, time-consuming process that may take months to years to complete.
How can I ensure the loan modification is properly handled?
Some tips in submitting a loan modification. The loan modification process is extensive. Not only is it crucial to have the right documents submitted in a timely, prompt manner, but it is also essential that all information submitted is current each time. Because of this, working with a dependable, experienced loan officer may be a more beneficial option for home owners. Unlike most attorneys working with loan modifications, a loan officer will not charge any upfront fees. Furthermore, submitting for an appraisal may also help. Although not required, an appraisal may help demonstrate to the lender the value of your home and magnitude of decline in value of your home since the previous loan terms. This may help in the approval process. Finally, start early. If you are considering a loan modification, the earlier you start the better. Do not wait until your home is being foreclosed to research your options. There are numerous options for home owners and many ways to save your credit or potentially your home.
How can I learn more about loan modifications?
If you are interested in learning more about your options as a home owner, or to see if you can qualify for a loan modification, feel free to contact Wealth Realty at (626) 600-2307 or email at firstname.lastname@example.org. The information and services we provide at Wealth Realty do not cost you a penny, but the safety and reliability in working with our agents is priceless. At Wealth Realty, your comfort is our primary concern.