Loan Modification Revealed
Articles - Mortgage
The purpose of a loan modification is to aid the homeowner and the mortgage lenders stop the hassle of a foreclosure. By modifying the loan the homeowners is able to get a more affordable mortgage suited to their specific income. The bank still gets paid and loses nothing compared to what it would lose in a foreclosure.
by GingerTaylor


The purpose of a loan modification is to aid the homeowner and the mortgage lenders stop the hassle of a foreclosure. By modifying the loan the homeowners is able to get a more affordable mortgage suited to their specific income. The bank still gets paid and loses nothing compared to what it would lose in a foreclosure.

The two important factors in a loan modification are figuring the homeowner's complete monthly income and multiplying it by the housing to income ratio, minus taxes and insurance. Based on the calculations the mortgage should be decreased by at least 10%. The other factor is protecting the bank. This is built into the loan modification automatically. The lender is protected because the loan is modified based on the homeowner's financial situation. As such, the bank is secure in that the homeowner will be able to pay their monthly mortgage payments on time.

The expense of modification is lower than the expense of foreclosure and it is a win-win solution for everyone involved.

Of course there are more alternatives like refinancing that work for some homeowners. However, numerous of people are not in a position to refinance nor is it a practical long term solution for avoiding future problems. More possibilities include short sale or deed-in-lieu of foreclosure.

Loan modifications create immediate relief because the interest rates are restricted to the current market rate. borrowers with adjustable rate mortgages or interest only loans have the chance to lock in rates.

To be eligible:

1. You must be living in the home

2. Loan modification is not for Second mortgages

3. You must show proof of income

4. Your current mortgage payment must equate to 31% or more of your gross monthly income

The loan modification process can be complicated and confusing for many perturbed homeowners. If you are uneasy with negotiating with your lender by yourself or if you want to better understand your alternatives, contact a loan modification attorney for assistance.



DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

To learn more information about loan modification services contact janian & associates for a free consultation.