The objective of a loan modification is to help the homeowner and the mortgage lenders avoid the hassle of a foreclosure. By modifying the loan the homeowners is able to receive 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 choices like refinancing that work for some folks. However, lots of people are not in a position to refinance nor is it a efficient long term solution for avoiding future problems. Other possibilities include short sale or deed-in-lieu of foreclosure.
Loan modifications create immediate relief because the interest rates are confined to the current market rate. folks with adjustable rate mortgages or interest only loans have the opportunity to lock in rates.
To be eligible:
1. You must be living in the home
2. Loan modification is not for Second mortgages
3. Provide proof of your income
4. Your current home loan must match 31% or more of your gross monthly income
The loan modification process can be overwhelming and confusing for many distraught homeowners. If you are uneasy with negotiating with your lender by yourself or if you want to better understand your options, contact a loan modification attorney for assistance.
For the best mortgage modification service in the country contact janian and associates for a free consultation.
