When To Consider Loan Modification

When To Consider Mortgage Loan Modification And Stop Foreclosure Cold

Mortgage loan modification is one the best methods to consider if you simply can’t afford your house payment, have fallen behind, and find that the amount of principal owed is far beyond your ability to repay.  With the real estate collapse and the slashing of jobs, millions of people are in this situation, and without help of some kind, are certain to lose their home. Millions have, in fact, already lost their home. If you would like to you’re your home, then the process of loan modification, in conjunction with the federal programs now available to help you save your home from foreclosure, is probably your best bet.

With loan modification a new and modified repayment schedule is set up by the lender for the borrower so he can make his or her mortgage payments on time. A reduction in the amount of principal is also possible, as in many cases, the amount owed on the home can exceed the actual value of the home by up to 50%, depending on the market.

Most people consider the process of loan modification only as a last resort, when they are already 3 or more months behind on their mortgage. One shouldn’t wait until it gets to this point to begin the process, though it must be stated that most lenders will not even entertain the idea until you are at least one month behind.

The problem is that once you are several months behind, the foreclosure process may begin to proceed rapidly, and initiating a loan modification at this point may prove difficult. Thus, it can be to your advantage to procure the assistance of a homeowner’s assistance program that specializes in stopping foreclosure and negotiating with the lender on your behalf for a loan mod that is favorable to you.

The main objective of loan modification is to help both the lender and the borrower. The new repayment schedule will be designed by taking into consideration the specific  financial situation of the individual; in most cases; the borrower will gain much more in the negotiations than the lender – if the negotiation is done properly. Remember, lenders are looking out for their best interests as well, so it is important to go to the mat in defending your own interest: staying in your home with a payment you can afford.

The lender does benefit by not having the expenses of foreclosure, where recovery these days can be less than 50c on the dollar.  Even if the lender takes a 20% or 30% loss by agreeing to a loan modification,  the lender comes out ahead – so it is the bank or mortgage company’s best interest to come to an agreement with you.

So when properly negotiated,  loan modification is one of the best ways to stop foreclosure. Obtaining good loan modification terms will not only help you keep your home from being foreclosed, but eliminate all the stress and worry that is such a burden for those facing the nasty letters and phone calls that seem to be standard fare from most banks to their customers who are struggling, often through no fault of their own.

Obtaining a payment you can live with, and getting to keep your home, will be a huge relief, and well worth going through the loan modification process to obtain.  There are many good mortgage loan modification companies online, and you have nothing to lose in applying but your financial stress, and everything to gain.