Even though mortgage loan modifications have helped so many people to save their homes during the current economic crisis, there is still a lack of knowledge amongst homeowners (many of whom may well be in dire need of this service) as to exactly what loan modification is, how it works, how to apply, who qualifies etc.
Let us start by dispelling a common myth about loan modification:
Loan Modification is appropriate only in the case of foreclosure.
It is a common misconception among homeowners that loan modification is an option only under extreme circumstances, such as when you are on the verge of foreclosure.
This is not so. Literally millions of people in America qualify for loan modification without being in foreclosure. Broadly, anybody whose monthly expenses exceed their monthly income may be a good candidate for loan modification. You can have money in the bank, you can have an expensive car parked on your drive and still qualify for loan modification. You just have to be moving backwards financially, so to speak: spending more each month (in essential outgoings) than you have coming in.
Families can get into financial difficulty for any of a number or reasons - loss of job, reduction in pay, sudden unexpected medical costs, a partner or spouse may lose their income.
Loan modification is a renegotiation of the existing mortgage, to effect a reduction in interest rates (and, sometimes, a reduction of loan principal too), leading to lower monthly payments which are affordable and sustainable to the homeowner.
It is a long-term solution - it can help you save your home permanently. It's no good if the new lower monthly payment is too high and you are straight back facing foreclosure six months down the line. For this reason, the loan modification in and of itself may not be enough - it may be necessary to demonstrate to the lender that you can lower your outgoings and/or increase your income such that the modified loan is a realistic solution.
While it is possible to contact your bank's loss mitigation department directly to initiate a loan modification request, it is not really advisable to go it alone. It makes as much sense as representing yourself in a court of law.
You really need the services of a good loan modification company, which has its own team of dedicated loan modification attorneys. They know how to speak to the banks to achieve the desired result. It is not uncommon for good loan modification companies to achieve a reduction in interest of 30 - 50% on behalf of their clients.
This is well worth whatever fee the company charges - it could mean no less than the difference between losing your home (with all the pain and upheaval that entails) and keeping it.mortgage renegotiation
provident funding home loan modification
provident funding home loan modification
For more information on how loan modification can save your home, click here: mortgage loan modification