Home Loan Modifications. – After the economic crisis has swept the country, many families have been faced with the fear of losing their homes. Not to worry, if you are one of the unfortunate who are facing foreclosure, know that you have multiple options available.

A loan modification, for one, has proven to help many citizens keep their homes from foreclosure. It may help you too. The first thing you have to do is to know which are myths and truths when it comes to loan modification.

1. Your creditors are rooting for the chance that their borrowers lose their homes.

- The banks do not make any money or get back their investment if it forecloses on your home. So as long as you show them that you are determined to continue on your payments, they will surely be willing to cut a deal with you.

2. You are not qualified for loan modification if you have bad credit.

- Even if you have a bad credit score, you can still qualify for a loan modification.

To be more specific, the most influencing factor that affects your qualification for a loan modification is your ability to pay not your credit score. The amount of your income or how much you make monthly decides whether you can modify your loan or not.

In the past, loan modification is only for those who are delinquent in their monthly debt payments. Today, that is no longer the case. Major creditors are now amenable to negotiate adjustable rate mortgages in order to keep their clients’ homes from going into foreclosure. They would rather modify your mortgage payments to your monthly financial capabilities rather than having you walk away and file for bankruptcy.

Be aware that a loan modification rather than defaulting on your debt altogether keeps your creditors from filing a deficiency judgment against you. Aside from that, everyone should be informed that one has to pay both bankruptcy payment and a mortgage payment when he/she files for bankruptcy.

It is never too late for to apply for a home loan modification. This can be done up to the sheriff’s sale. Again, let me stress that home loan modifications are for anyone who can prove that they have enough monthly income to support the modified debt.

If you have already been served foreclosure documents, your first move is to contact your creditor and ask to be connected to the loss and mitigation department and start to re-negotiate your debt as early as possible. It is not advisable that you get in touch with the attorney who served the foreclosure documents, go straight to the lenders you have borrowed from.

In the negotiation process, you have to convince your creditors that you are determined to pay off your debt but you just do not have the means to keep up with the current terms of the debt. Give them a specific amount of what you can afford monthly along with proof of your monthly income. Of course, it would be useless to agree to an amount that you cannot afford just to buy some time from foreclosure. Agree only to realistic terms, the exact amount you are 100% sure you can keep up with and the exact date as to when you can start paying the debt off.

Once you have settled the negotiation, check the details out. If the amount payable in the written agreement is one you cannot afford, send it back to the creditors and re-negotiate again. Let us reiterate that creditors will surely help you out in modifying your loan as long as they see that you are determined to pay them back. And of course, it would help that you have proof of a monthly income that can support the loan.

Inform the attorney’s office who has served foreclosure documents of the agreement you and your creditor have come up with. It would be best to do this in writing.

Once your loan modification is underway, keep your end of the agreement and always pay on time. Home loan modifications will ensure the success of paying off your debt sooner and most of all you get to keep your precious home.

 

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