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Saturday, August 1, 2009

What You Need to Know About Loan Modification

How would you like to slash your mortgage payments by 10% ... 20% or even 50%? Then you may want to consider asking your lender for a loan modification. Of course, modifying an existing mortgage isn't for everyone - it does some with some serious consequences. But, if you are one of the millions of American families these days unable to make those monthly payments, it is definitely an option to consider.

Maybe you've heard the term loan modification, but you aren't exactly sure what it entails. In its most basic form, mortgage modification is a permanent change to your loan agreement designed to bring your payments down due to some sort of long-term financial crisis.

There are several ways in which a mortgage can be altered in a modification:

1. By extending the life of the loan. Let's say that you are five years into a 25-year mortgage and you suddenly become disabled. Maybe you have enough income to keep your house as long as you can lower your monthly payments. Your lender may be agreeable to extending that 25 year loan to a 40-year term in order to get those payments low enough for you to afford.

2. By lowering your interest rate. Adjustable subprime rate loans have gotten a lot of people into trouble in recent years. As interest rates skyrocketed, so did their payments, leaving many unable to keep up. More and more lenders are now realizing the benefit of offering these homeowners a lower permanent rate in order to keep them in their homes - and up-to-date with their payments.

3. Forgiving late payments, penalties and interest. If you are one of those homeowners who fell behind on your mortgage payments due to a job loss, only to discover that the penalties, interest and late fees were adding up faster than you could pay them once you got back on your financial feet, you may qualify for forgiveness of these add-on fees through a loan modification.

4. A partial loan forgiveness. It's not very common, but sometimes lenders will forgive a portion of a borrower's loan if they believe the homeowner can keep their account current in order to avoid foreclosure.

Of course, knowing the different types of loan modifications available is only the first step in the process. Here are a few other things you must consider when seeking this type of mortgage help:

·Whether or not your loan qualifies for modification. In the past only loans held by the original mortgage lender qualified for modification. That rule is slowly changing, however, making this option available to more borrowers than ever before. Still, there are strict qualifications for loan modification, so check with your lender to see if you even qualify.

·There are no laws requiring a lender to offer modification assistance, no matter what the circumstances. Approval is under the sole discretion of the lender. No one can make them do it.

·Modifications are easier to get than refinancing or new loans. Depending on the lender, the process can be much easier, involving far less paperwork and financial information. Some don't even require that standard income/debt ratios be met as long as you can prove that you can handle the new payment.

·Loan modifications are not new loans! They are a change to an existing loan.

·Although there are some small fees required for a modification, no standard closing costs associated with most mortgages apply.

You don't need to hire an expensive firm to do your loan modification, on the contrary doing it yourself leads to better results and thousands of dollars saved. One such kit is 60 Minute loan modification. 60 Minute Loan Modification is very simple to follow and has helped multiple people stay in their house and avoid foreclosure.


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