What Is A Loan Modification? A modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.
What Are The Benefits to a Loan Modification:
- Lower Monthly Payments
- Freeze Your Adjustable Rate
- Fixed Payments
- Elimination of Stress Related to Your Mortgage Problems
- Avoiding Foreclosure and Maintain Good Credit
- Not Forced to Sell in Down Market
- You Stay in Your Home!
Why Would My Lender Agree To Accept A Loan Modification? Your Lender Does not want your home. They are in the business of Lending Money NOT property management. It comes down to simple math the bank rather take a guaranteed return on their investment today over a possible recovery of part of their investment later.
What Are The Advantages Of A Modification Over A Refinance? Loan modifications do not require costly closing costs, title fees and points/broker fees. Most importantly however modifications do not have pre-set credit requirements or LTV restrictions that limit refinancing options for most homeowners.
Will A Loan Modification/Short Sale Affect My Credit? When obtaining a loan modification there is no adverse affect on your credit.
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2 comments:
Great article, and right on time for people in dire need of help.
Jamie L. Melton
www.phenomeblogs.com
Thanks. This is unchartered waters for many homeowners and we look to help provide solutions to mortgage problems.
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