Mortgage Modification is simply taking your current mortgage and modifying that loan with your lender. This is a permanent restructuring of the loan contract so you basically have a new mortgage without the costs or qualifying of refinancing.
Mortgage Modification Advantages:
No qualifying
No closing costs or points
Good credit score not required
An upside down mortgage is eligible
If behind on mortgage payments you are eligible
If current on mortgage payments you are eligible
Financial hardship is expected
You can avoid or stop mortgage foreclosure by modifying your loan even if your sale date is less than two weeks away
Mortgage Modification Options
Obviously if you are asking for mortgage modification, your intention is to negotiate lower payments. There are several ways you can modify your loan to your advantage:
Convert variable interest to a fixed interest rate
Lower your interest rate
Get your Mortgage Insurance Company to cover all delinquent payments so you are again current
Tack missed payments onto the end of the mortgage so you are again current
Have your lender forgive penalties and late charges if late or behind on mortgage payments
Get a Principle Reduction reducing the loan balance due
Extend the length of the loan to reduce monthly payments
When A Mortgage Loan Modification Request Could Increase Payments And What To Do
While the intention in loan modifications is to lower payments it does not always go that way. Sometimes you can do something about it and sometimes it is unavoidable. Here are the situations where that will occur:
Lender requires a Repayment Plan instead of making a Mortgage Modification
Lender requires repayment of missed payments before considering restructuring your loan
Converting an Interest Only Loan to principal and interest payments
Converting a Negative Amortizing Mortgage to principal and interest payments
Mortgage Repayment Plans Increase Payments
If you are behind on mortgage payments, you may end up with a repayment plan that will raise your payments until you have repaid your missed payments.
Your lender could require you pay 1 1/2 times (or some other fraction of your payment) the mortgage payment until caught up and will want that in writing. Lenders may even use scare tactics to get you to sign the agreement.
Your lender may require you complete a repayment plan before they will even discuss mortgage modification, with no guarantee they will restructure your loan to better terms.
note: If you find your self in this situation get professional help before you sign anything.
Tell your lender you need time to have your attorney review the documents. If your lender will not grant enough time for a review, tell the person that they should know that you have been recording this conversation for personal notes but you are now notifying them that this conversation is being recorded and you are going to ask them again for enough time to have this agreement reviewed by your attorney before signing and ask for a week.
Even if you have not been recording the conversation (which legally you can not without informing the person first) this usually will get the persons attention and they will behave better. If you feel that the conversation is getting hostile you can inform the lender that you are now recording the conversation at any time, whether you really are or not.
Use the time to find a competent professional experienced in loan modifications, either an attorney or loss mitigator who gets results. You are welcome to contact me if you need help with this.
Converting An Interest Only Loan To A Fully Amortizing Loan
There are two situations where increases are likely. You have an interest only loan or your current payment is amortizing negatively.
Because of the loan option you are in right now, your monthly installments are extremely low for the size of the mortgage. That is great now, but when the balloon comes due or the negatively amortizing limits trigger, you may be forced into a mortgage foreclosure situation. What happens if you are not able to refinance because of financial hardship or an upside down mortgage?
Bite The Bullet Now Modify Your Mortgage
Modify your mortgage, bite the bullet now, head off foreclosure later. Restructure the loan to start paying principal and interest.
Even if the mortgage interest rate is reduced, adding a principal payment to the total monthly payment will increase the total amount.
note: This is a situation where you may want a Loan Audit as part of your Mortgage Modification for extra leverage in negotiations. This is one of the more difficult mortgage modifications to settle, so you may want professional help. Again you can contact me if you need help with this.
Mortgage Modification From A Position Of Power
Prepare for battle, this is war! Put your self through boot camp.
Get a loan audit to find out if your mortgage has major violations
Write a killer hardship letter
Take your Mortgage Loan Modification package to your lender with the terms you name, want and qualify for with all supporting documentation and arguments as a completed package.
Do not ask your lender to put your submission package together for you! Decide what mortgage modification you want and qualify for.
Mortgage Loan Modification Myths Exposed There are many Mortgage Loan Modification myths floating around. Get the facts. More homeowners qualify for a loan modification than lenders are letting on. Are you one of them?
How Does Mortgage Loan Modification Work? Part 1 Mortgage Loan Modification is simple, but you need to understand what it is and how it works so you are in better control of the outcome. How do you know if your lender is pulling the wool over your eyes?
How Does Mortgage Loan Modification Work? Part 2 In Part 2 we go into the nuts and bolts of Mortgage Loan Modification. Covering what your lender looks at before modifying your mortgage loan and what your lender requires.
What Is Loss Mitigation? Get answers to Loss Mitigation questions - what is loss mitigation, what is the loan loss mitigation process and how you can benefit from the process.
HOPE For Homeowners H4H - Short Refinance This Government help to stop foreclosure is a short refinance that includes principal reduction and a new option that makes a short refinance more attractive to lenders/investors
Go to Loan Modification Home Get real answers to the real questions on modifying your home loan, government mortgage assistance, government help to stop foreclosure and other modification and foreclosure questions. Do I qualify for a mortgage loan modification? Can I save my home?
