Life doesn’t always go as planned. A job loss, a significant illness requiring extended hospitalization, or some other change in life circumstances can leave a homeowner in a position of financial hardship. The thought of losing your home because you are behind on your mortgage or facing foreclosure is overwhelming and scary for most people. Fortunately, there are legal options available to help reduce your payment and interest rate before you reach that point. A loan modification program may be a good option for you.
A loan modification is an agreement between a borrower and a lender to change the original terms of the mortgage. It is not a new loan or a refinancing of the original loan. What this means for the borrower is that the monthly mortgage payment can be lowered by several means, such as:
There are a few effective approaches for a loan modification that can help keep you in your home and preserve your credit.
By extending the loan payment terms, the borrower’s monthly payments are lowered. For example:
Say you are paying $880.00 monthly for a 30-year loan term at a 6% interest rate, and you consider having a loan modification and extending your loan payment term to 40 years. Your new monthly payment would be around $650.00 monthly, which decreases your payments by $230.00 each month.
Some lenders may agree to lower the borrower’s interest rate on the loan, resulting in a reduced monthly payment amount. The borrower can reduce the interest rate up to 2.5% lower under a loan modification program so long as the lender agrees.
For a temporary period, some lenders may agree to accept a lower monthly payment without changing the original term of the loan until the borrower gets back on their feet.
Loan modification can provide several benefits for a borrower:
When a homeowner in financial difficulty is researching mortgage or debt-relief options, some companies may try to take advantage of the situation by requiring an upfront fee to review your situation. Therefore, make sure you are dealing with a trustworthy company by asking about their required fees and requesting references. You should not have to pay an initial fee to receive an initial consultation about your finances and loan situation.
Debt Rescue Law is a trusted partner for many borrowers and can provide more information about the loan modification program. Give us a call at (833) 707-1234 today for a FREE consultation to get you clear of your debts and keep your home!