There has been a noticeable spike in the US foreclosure rates in the past decade. It has been so alarming that it became one of the contributing factors to the economic recession in the US. The current administration is doing its best to fix the glitch in the mortgage system through the Obama housing bailout program, but considering the extent of the damage it has incurred on the economy, it might take a long time to stabilize the situation. At the moment, the best solution known to fix this problem is to modify troubled mortgages. Here is a quick loan modification guide.
What is it?
Restructuring bad loans is basically the act of modifying terms and conditions in the mortgage contract. It entails changing conditions pertaining to interest rates, monthly payments, loan terms, and the principal. The ultimate goal of doing this is to make payments more affordable for borrowers. It also saves the property from being foreclosed.
Who needs it?
Are you experiencing any of these?
1. Bad credit
2. Delayed home loan payments
3. Loss of job
4. Loss of income
6. Serious illness
If you are, then you can quality for loan modification. The above-mentioned scenarios are valid financial hardships that would give you a higher chance of being granted this mortgage procedure. Make sure that before you declare one of these, you have enough documents to prove your hardship like credit reports and breakdown of monthly expenses, among others.
How do I go about with it?
You have two prime options in restructuring your loans: 1.) process your papers on your own; or 2.) seek the services of a professional mortgage attorney to process your documents for you.
If you decide to do number 1, be sure to study the whole procedure of loan modification first to avoid wasted efforts. Prepare all the required documents, and although this would take time, this would prove to be helpful when you are about to face your lenders. Be warned that those who go for DIY process on this matter usually have a longer waiting time before everything gets approve by lenders. On the other hand, if you pick option 2, the problem with longer waiting time would be reduced since you have the services of professionals who have contacts with major lending institutions. In a manner of speaking, their connections are also your connections, so you would be in the hands of the right people who are experienced with such matters and you do not have to second-guess on the steps that you must take.
How would you benefit from this?
This loan modification guide would bring you so many financial advantages. One is lower interest rates. The government has recently decided to intervene on the practices of lending institutions to make sure that interest rates on mortgages would be reduced to help borrowers escape the threat of foreclosure so this is high time for you to take advantage of this mortgage option. By lowering interest rates, monthly payments would also be lowered. Loan terms could also be extended to up to 40 years to help borrowers preserve homeownership and avoid foreclosure.
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