The Truth About Loan Modification
The number of homeowners that are unable to maintain their monthly mortgage payments continues to rise
. Statistics indicate, 1 out of every 200 homes will be foreclosed on.Foreclosures are not good for mortgage lenders as they are for homeowners. Contrary to what many people think, foreclosures are neither lucrative nor favorable for the lenders. Loan modification is the best alternative for both the homeowner and bank to avoid unwanted foreclosure. A modified loan will empower the homeowner to hold on to ownership of the home and the lender to receive its loan amount in full.
One more key advantage of loan modification, is that it helps the homeowner keep their credit rating unblemished. A foreclosure can destroy a credit score in such a way that it might be extremely hard for the borrower to ever fully recover from the damage. Some people assume that it will cost them nothing to just surrender and step away from their home and let it go into foreclosure. In actuality, foreclosure will require money and will unfavorably affect your credit.
Mortgage lenders favor modification because it means that there is no loss for them at all. Additionally, the bank knows that the homeowner will be able to pay their monthly mortgage payments on time, since the loan was modified based on the homeowner's income and financial situation.
Here are some general customary criteria for basic eligibility for loan modification:
1. The home must be owner occupied
2. Second mortgages do not qualify
3. Prove Income
4. Your current mortgage must equate to 31% or more of your gross monthly income
A loan modification can help struggling homeowners that are trying to keep their home. It is the only real a win-win option for the homeowner and the bank.
by: Ginger Taylor