Can a Hardship Mortgage Loan Help You Avoid Foreclosure?

For many people, a hardship loan modification can mean the difference between keeping their home or losing it to foreclosure. But what is a mortgage loan modification? It is a revision of the terms of current loan that make your loan affordable, so that the homeowner is able to make the payments.

The federal government has provided a way for persons facing foreclosure and imminent hardship to apply for a federal loan modification. If you are a person that has been making payments and has been affected by the conditions of the economy, you may qualify for one of these loan modifications.

The two biggest options that the government offers is a mortgage modification that allows a person to add missed payments to the end of the loan, but you will be expected to prove financial viability. You will have to be able to explain what has changed that will allow you to make on-time payments that was different in the past. The modification will help make your loans more affordable, but the lender is going to want to be assured that there is no danger of future default.

A government back mortgage loan refinance is also an option if you have a Fannie Mae or Freddie Mac mortgage. The government is trying to instill confidence in the mortgage lender and restore strength to those to guarantors. So, they are allowing homeowners that meet certain criteria to refinance their existing mortgages through the government’s loan refinance program.

This program offers a mortgage refinance to a low fixed interest rate. In order to apply for this assistance, you will need to fill out the same type of paperwork required for a mortgage. This paperwork will include employment and financial information. But more importantly, you will be expected to explain the reason for your hardship and how you are planning on meeting the terms of your loan modification agreement.

Your current lender and the federal government website is the best resource for getting information on applying for a government loan modification that may keep your home out of foreclosure. It is wise to being researching your options at the first indication of financial distress. You will have more choices available early rather than later. Many people make the mistake of thinking they can get caught up on payments on their own, but that is rarely the case and by the time they realize it too much time has passed.