What is Loan Modification?
Loan modification is a process that allows homeowners and lenders to change the terms of a loan in order to help the borrower stop foreclosure. A loan modification is not a new loan. It is the renegotiation – or loan restructuring – of an existing mortgage note. For homeowners behind on their mortgage, or those with a low credit score, a loan modification is often the only option available because they are unable to get approved for a mortgage refinance or a short-refinance.
A loan modification can be done in several ways or combination of ways listed below:
the loan’s interest rate may be decreased
the interest rate could be changed from an adjustable to a fixed rate
the period of time the borrower has to pay the loan back can be lengthened
the type of loan could be changed altogether
Many borrowers are facing foreclosure because their interest only or variable rate loan interest terms have sky rocketed beyond what they could have imagined. A loan restructuring is an agreeable way for both the lender and the borrower to avoid the cost and hassle of the foreclosure process.
The U.S. government, now more then ever wants to help home owners remain in their homes. The government realizes that in order to correct the current crisis that our country is they have to attack the core of the issue. That is the housing crisis.
Due to unscrupulous lending over the last few years, many homebuyers got into loans that they did not understand nor could afford. It is this type of lending that has gotten us into one of the worst housing crisis that our country has ever experienced. Homes are being foreclosed at record numbers and neighborhoods are falling apart. The government now realizes that if they are to correct the current situation that our country is in, they have to start by keeping home owners in their homes.
Through the recent stimulus package, as well as through other programs, the
government has given incentives and has urged lenders to make sure that they make every effort to keep home owners in their homes. The government wants to assist you. Take advantage of this tremendous opportunity and modify your loan.
Don’t become a statistic in this foreclosure crisis, change your fortune and
stay in your home.