How to Get Help From a Loan Modification Program

Meeting monthly mortgage payments or attempting to refinance a home has become hard to do over the past year. Thankfully there is an answer in sight. A loan modification program will help borrowers who are in danger of losing their homes to foreclosure. This same program will also help those who have had difficulties refinancing their home to a lower rate.

The economy has turned borrowers who used to be able to pay their mortgages into potential foreclosure risks because of pay cuts, job losses, or rapid declines in appraised values on their homes.

In fact, there are a large number of people who already owe quite a bit more than the home is currently worth. The problem is compounded by homeowners who are selling below appraised values to get out from under mortgages they can no longer afford.

There are companies that can assist you through your loan modification. Loan modifications are typically too complicated for the average person to complete on their own, and information can be hard to find. A loan modification specialist can help you skip all the hassle and efficiently guide you through the process. It is possible to get a free consultation to see if a loan modification program would help your situation.

There is a catch to the loan modification program: simply that there can only be one modification during the life of the loan. So it needs to be handled in the right way. For homeowners more than a month behind, quick action is needed in order to complete the modification process.

What the loan modification program does is to get your mortgage payments (principal and interest), your insurance, and any association fees reduced to where it is no more than 31 percent of your gross monthly income. To do this the lender adjusts first the interest rate you are paying and then the principal amount owed.

So if you have a rate of say 7 percent, then you may get a rate as low as 2% and your loan term may be extended to 40 years instead of the normal 30 years we have become accustomed to. Also the lender may then forgive a part of the principal owed, as long as the new principal amount owed is not lower than the value of the home.

Though lenders are encouraged to work with modification companies to adjust the loans, they are not required to do so. To increase lender participation, the government gives a lender incentive of $1,000 per year for up to 3 years if the borrowers remain in the program. Borrowers can also earn $1,000 per year in principal reduction for up to five years if they keep the payments current.

Borrowers currently in foreclosure or bankruptcy may be eligible under this new plan. In fact, those who have been forced to declare bankruptcy may be required by the courts to do a loan modification.

The loan modification program offers a great opportunity for borrowers who are eligible. You may want to contact professional help to gather the needed financial information and get through the process for the greatest reduction of mortgage payments.
Author: KeithRonson



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