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How is a Loan Modification different from Refinancing?
Loan Modifications are for homeowners who are having difficulty paying their monthly mortgage payments due to a documented hardship. In most cases they cannot qualify for a refinance because they owe more than the house is worth or they fail to meet other requirements for approval, such as having a credit score that’s too low. Also, the cost of doing a loan modification is usually much less than the costs associated with refinancing. The results can often be better with a loan modification than a refinance would be in terms of lower interest rate, lower payment, etc.
Who is eligible for a Loan Modification?
The lender ultimately makes that decision. Each one has their own criteria and no two situations are exactly alike. The rate of success, however, often hinges on how well the case is presented to the lender and the skill and knowledge of the person doing the negotiations. In virtually all cases, a homeowner must be able to document a hardship in order to qualify. Common reasons for the hardship are:
- A Reduction Of Household Income
- Loss Of A Job
- Disability
- Mortgage Payments Increase Due To An Adjustable Rate Mortgage
- Divorce Or Separation
- Death Of The Primary Wage Earner
Why would a lender agree to a Loan Modification?
Most lenders will not even discuss a loan modification unless the homeowner is at least 2 payments past due. They would rather help the homeowner stay in their house if a Loan Modification will provide a long term solution. Without help from the lender, a foreclosure is likely to occur. Foreclosures are very costly to a lender and can cause them to incur a much larger loss.
How long does it take to complete a Loan Modification?
That can vary from lender to lender. The complexity of the case, how well it is presented, and the follow-up and skill of the person negotiating on the homeowner’s behalf all are factors as well. The time frame can range from a couple of weeks to several months.
Does a Loan Modification hurt my credit?
In most cases a modification will result in less damage because the account is brought up to date and a foreclosure is avoided.
What if foreclosure has already started? Is it too late?
If the Sheriff’s Sale has not taken place yet, the odds are much better. Time is definitely your enemy. The foreclosure process and laws vary from state to state. We know the laws for each state and have stopped foreclosures that were scheduled for the next day. We have also successfully negotiated Loan Modifications after the Sheriff’s Sale, but it is more difficult. Much depends on the lenders’ willingness to cooperate.
How will I know if I qualify?
The best place to start is to call us for a free consultation. Guidelines vary, but most lenders/servicers have similar requirements. Examples are:
- Home Owner Has A Documented Hardship
- The Mortgage Has At Least Two Payments Past Due
- Property Must Be The Home Owners Primary Residence
- Second Homes And Investment Properties Usually Won't Qualify
- The Home Owner Has Not Intentionally Defaulted
- Borrower(s) Can Demonstrate That They Will Be Able To Pay The Modified Payment And That The Modification Will Provide A Long-Term Solution
Can I do my own Loan Modification?
Yes, it is possible, but we do not recommend it. A Loan Modification is really a negotiation process. It is important to have the necessary skill and knowledge to achieve the best results. If you had a legal issue, you could represent yourself in court without an attorney as well. The odds are that that your results will not be as favorable as they would be with professional assistance.
It is also very important to understand that most lenders will only consider a Loan Modification one time. They are so overwhelmed with delinquent loans and foreclosures that they don’t have time review the request more than once. It needs to be done properly the first time because there is rarely a second chance!
What should I do next?
We offer free consultations to help you decide what is best. Just fill out the information below and one of our experienced experts will contact you. If you prefer, you can call us directly from 9AM – 7PM, Monday – Friday. Call us at (734) 756-6050. Other dates and times are available by appointment.
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How to Find Out if You Qualify
Please complete the information below and one of our experts will contact you for your free consultation. Or you can call us at (734) 756-6050 for a FREE phone consultation.
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