Is Loan Modification Worth the Cost?

If you’ve been looking into loan modification, then you already know that the fees can run into the several thousand. Upon hearing that, you’ve probably had moment to pause and wonder, “Is it worth it?” To answer that, you must look at the reason why you are considering loan modification to begin with.

So what is your reasoning? Most folks don’t simply wake up one day and say to themselves, “Hey, I think I’ll have the bank modify my home loan today!” The likely fact is that you fall into one of the following categories:

– Your home is in foreclosure or the bank is threatening foreclosure
– You’ve fallen behind a few payments
– Your income situation has changed and you can no longer afford your mortgage
– You’re afraid of losing your house, and you want to save it

If you are at real risk of losing your home, then the perceived cost of doing a loan modification is no cost at all. The real cost is in not doing it — the cost of that being your home! Naturally, if you are in a situation where you can’t even afford your mortgage, you’re probably concerned about coming up with the thousands of dollars needed to modify your mortgage and get back on track.

Consider those who file bankruptcy. As part of the process, they are required to prove to the court that they are unable to spare any funds to go towards paying off their debtors. Where, then, do they come up with the money to pay a bankruptcy lawyer hundreds, even thousands of dollars?

But bankruptcy often saves the filer tens and even hundreds of thousands of dollars. When a person is in such dire conditions that they need to file bankruptcy, willingly destroying their credit in the process, you can bet that they find some way somehow to come up with the lawyer and court filing fees to save themselves from financial disaster.

If loan modification can save your house, the purchase of which may have been one of your proudest moments, isn’t that justification enough? Don’t forget that once a loan modification is completed, delinquent payments that you owe go away along with late payment fees.

If your mortgage payment is normally $ 2,500 and you’re three months behind, then the few thousand you pay to make the $ 7,500 in delinquent payments go away is justified from a financial standpoint. Oh, right… and you also save your house! Loan modification can also save you up to 25 percent on your monthly payments, resulting in several thousand dollars saved every year. Now are you starting to see the real value of loan modification?

In the end only you can decide that loan modification is the right choice for your specific situation. Just remember that the more educated you are about the effects of it, the better position you’ll be in to make the right choice.