Digging Your Way Out of a Bad Mortgage with Loan Modification

So you’ve somehow managed to find yourself in a bad situation with your mortgage. So bad, in fact, that you feel hopeless, as if there is no longer any way to save your home from foreclosure. While it’s true that this is a very bad situation to be in, there may still be hope for you in the form of a loan modification.

Now before you say, “No, loan modification is for other people that aren’t as bad off as me,” take just a moment to consider that, no matter how bad off you are, the next few minutes you take to read this article may show you that there is indeed a light at the end of the tunnel.

Even if you’ve incurred legal fees or other related foreclosure costs, no matter how far behind you are on your payments, no matter how high the fees and penalties have piled up, loan modification can put an end to all of that and get you back on track to paying off your home.

One of the beautiful things about loan modification is that was made just for people in situations like yours.

How Will Loan Modification Help Me?

As long as you haven’t entered foreclosure — or you have but are still in the home and it hasn’t be resold yet — there’s a very good chance that you qualify for loan modification. And the benefits to doing so are many.

To start with, any late fees and other penalties — as well as legal and foreclosure fees — you’ve racked up can often be rolled up into the principle balance of the modified loan. In other words, you don’t have to make those payments up front. They simply become part of your mortgage. In fact, a good loan modification company might even be able to get your late fees completely waived.

Furthermore, you are likely to have your interest rate lowered, your monthly payment lowered, and there is even a possibility of having the principal balance lowered.

Now you might ask, “Haven’t all those missed payments destroyed my credit?” The answer is yes. The good news is your credit rating won’t affect your ability to qualify for loan modification. That’s because you aren’t applying for a new mortgage. You’re just making changes to your existing one.

Is There Anything I Can Do to Help Ensure I Qualify?

Banks want, more than anything, to come out as unscathed as possible. They will be most willing to negotiate if they see that you are truly committed to the process.

If you’ve been doing your research, then there’s a good chance you’ve heard stories about homeowners who trash their home before walking away from it or letting the bank take it back. Some people do this out of anger or because they feel justified in “sticking it” to the bank.

However, you should definitely NOT mistreat your home this way. The obvious reason for this is because once you modify your mortgage, you’re going to continue living there. But another reason is that your bank may want to inspect your home before deciding whether or not to enter negotiations with you.

Some home lenders have a saying: “A person who doesn’t take care of their money doesn’t take care of their home.” In other words, those who are undisciplined with their money are typically undisciplined all around, and probably weren’t disciplined enough to take good care of the home they lived in.

Turning this around, it could be assumed that a person who doesn’t take care of their house doesn’t take care of their money. In others words, doing a loan modification for somebody that hasn’t taken good care of their home might be likely to just default on their modified loan and the whole process will have been a waste of time for the bank.

Take good care of your home so that if your bank does decide to inspect it, it will leave the bank with a good feeling about your willingness to work with them.