Lenders would much rather find a way to work with you to continue to receive the money you owe them for your home mortgage instead of seeking foreclosure.
If you are struggling to make your mortgage payments, a loan modification may give you the relief you need to keep your home by changing the original terms of the loan to make the payments more affordable.
While this used to be a somewhat risky process for borrowers during the mortgage crisis of the early 2000s, legislation has been passed to ensure greater protection for the homeowner during this process.
Most lenders have a department targeted towards home retention (sometimes called “loss mitigation”) representatives who can work with you to see if you are eligible for a loan modification.
These are usually granted due to a dramatic change in personal circumstances, such as loss of a job or major illness, but other reasons are also considered.
Generally speaking, an “affordable” mortgage is typically defined as one with a payment that’s no more than 31% of your income.
So, it’s possible by going through this process, your mortgage could be reduced to that amount. This is done by lowering the interest rate, extending the length/life of the loan, or even lowering the principle.
You must prepare relevant documents to prove significant financial hardship to qualify for this type of loan, and there are restrictions, including a maximum you can owe, and that the property has not been condemned.
You also cannot have been convicted in the last 10 years of certain types of crimes, including felony larceny, theft, forgery or tax evasion, to be eligible for this type of program.
If you are eligible, you’ll likely need assistance preparing the necessary documents and forms to apply for loan modification.
Contact us to see if you might qualify for this type of mortgage relief.
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