Common Questions and Answers About Loan Modification

Recent changes in loan modification law and regulations have made it more accessible to more people, thus opening up additional possibilities to those at risk for losing their homes to foreclosure. But if you’ve been looking into loan modification, you might have ended up with even more questions than you started with.

The truth is that the process is more complex than it sounds. That’s the reason why good loan modification companies have the masters of complexity — attorneys — on hand to ensure that their clients get the best deal possible and that all regulations are complied with.

To help clear things up, here are answers to a few of the most common questions people have regarding loan modification.

Won’t a refinance do the same thing and cost me less?

No. A refinance, at best, will get you a lower interest payment and is only a possibility if you are in good standing. If you’ve fallen behind or are at risk for foreclosure, refinancing won’t be an available option. Furthermore, loan modification has the potential to lower your interest rate much more than a refinance as well as offer several other options to make your mortgage more affordable.

How else, besides having my interest rate lowered, can I be helped?

There are several changes a lender may agree to, the more common of which can include any combination of the following:

– Extending the term
– Forgiving late fees and penalties
– Rolling up of missed payments into the principal balance
– Lowering the principal balance

Which options will be available to you depend largely on your particular situation.

I’m not behind on my payments. Can I still qualify?

Yes. Being behind on your payments is not a requirement. However, it will probably be a less difficult process and you are more likely to get a better deal if you are behind. But before you go missing payments just so you can get a better deal, consider the effect it will have.

Missing payments will cause your credit score to take a hit. If you haven’t missed any payments and have been able to maintain good credit up to now, you might want to retain your clean record. A loan modification won’t have a negative impact on your credit rating, and it might be worth it to keep your credit clean, even if it means not getting as good of a deal.

I tried working with my lender directly, and they refused to negotiate with me. Is there any hope for me?

Absolutely! If it isn’t in the bank’s best interest to work with you to modify your mortgage, then you can bet they’ll do all they can to avoid it. But a good loan modification company, backed by attorneys, has plenty of tools that they can use to bring a lender to the negotiation table. The law is often on your side, and lawyers will have the knowledge and experience to take full advantage of it.

Whatever your situation, your best option to learn more about how loan modification can work for you is to talk with a loan modification company or attorney. The sooner you do so, the better your chances of staving off a foreclosure are and the sooner you can start saving money on your mortgage payments.