Ways To Get Out Of Debt

10 Common Questions On Loan Modifications

March 16th, 2009

1. Describe a loan modification program?
In basic terms a loan modification program offers an adjustment in the terms of your current mortgage loan resulting in a manageable and sustainable monthly mortgage. A loan modification process may include a lowering of the interest rate, a longer loan term, and sometimes a reduction of the principle balance.

2. Why would a mortgage company agree to do this for me?
A bank is willing to negotiate a mortgage modification program provided it serves their best interest. Meaning, the mortgage company will agree to a loan modification on the condition that it is more cost effective to change your mortgage loan to enable you to keep making your house payments in opposition to the cost of filing for foreclosure. Mortgage companies are inundated with ever increasing foreclosure rates, with the continuing downward trend of home values, the mortgage company would likely lose more money filing foreclosure and trying to sell your house than they would taking a loss on the mortgage. In addition, banks have to answer to the FDIC if they have an abundance of non-performing assets on the books, such as foreclosed houses. For more foreclosure information, go to http://www.loan-modification-masters.com.

3. How can I know if I can qualify for a mortgage modification?
As written before, the bank will do what it feels is best for them. Thus, the number one deciding factor for your bank is your ability to consistently make the new loan payment, today and in the future. You have to show the mortgage company that based on your income and expenses, you are going to be able to sustain the new home payment.

4. How do I show to my bank that I am capable of making the modified house payment if they offer me a mortgage modification?
You will have to provide the bank with an accurate list of all your monthly expenses and income. Also you will have to calculate your debt ratio to show that your modified housing costs (include insurance, HOA fees and taxes) will not go over a certain percentage. The precise percentage varies with every situation.

5. Will the lender let my missed payments be incorporated into my loan modification?
It is an option, part of the negotiation process is to have your missed mortgage payments rolled into the modified mortgage and averaged out over the life of the loan in an affordable payment amount.

6. Do I have to pay the entire amount of the fees and penalties the bank has heaped on to my loan?
Don’t forget, you are legally entitled to a full, detailed list of every fee and penalty. Also, depending on the type of loan you have, the lender may be forced to forgive the fees and penalties. You need to educate yourself about your legal rights before you agree to the terms of a mortgage modification.

7. What if my principle is more than the house is valued?
Believe it or not that could actually help you out. Inquire with a local realtor to get a Comprehensive Market Analysis. This is a widely accepted report that documents the true present worth of your house. You can use this documentation to request your bank to reduce the amount you currently owe as part of your loan modification.

8. Do I have to be employed to qualify for a mortgage modification?
Generally the answer is yes, you have to show your bank that you will have the income required to pay the new mortgage payment. Should you have an FHA or VA loan, there are some loan modification programs that can give you time to locate employment prior to resuming payments again. The foreclosure process is stopped during this period.

9. Since I really don’t know about home loans, is it even likely for me to negotiate a mortgage modification with my mortgage company?
Lenders would rather to negotiate you a mortgage modification more than foreclosing if it helps them. However even though it may be in their best interest to negotiate you a loan modification they don’t make it easy on you. You see, their number one preference is that you keep on paying your mortgage based on the original terms. So yes it is a possibility that you do it yourself but be ready for a lot of work.

10. Is there a place where I can get assistance with getting a mortgage modification?
At Loan-Modification-Masters.com we provide loan modification services. There are hundreds of places selling loan modifications but few provide the level of service that we do. If you are searching for foreclosure programs then Loan-Modification-Masters.com is where you should be. Stop by and visit us now to learn how we can help you in protecting your house.

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