subject: Stop Foreclosure – Keep your Home with a Loan Modification [print this page] Author: Heather Dunlop Author: Heather Dunlop
There is a way for you to stop foreclosure and keep your house. A loan modification allows you to keep your home. During the modification, the foreclosure auction while the loan is being modified. A loan modification is when you work with your existing mortgage company to change the terms of your existing loan. It is not a refinance. The difference between a modification and a refinance is a refinance means taking out a new mortgage. Refinance involves going to a mortgage broker, paying closing costs and points, and starting the interest amortization from the beginning. Amortization has to do with how much of your payment goes toward the principle and how much goes toward the interest. When you refinance, the majority of your monthly payment is applied toward the interest. When your mortgage is modified, the lender agrees to lower your interest rate and/or monthly payment, extend the term of the loan, and possibly moved your missed payments to the back end of the loan. You can call the bank to ask them to work directly with you to modify your loan. The challenge is that many banks do not want to work with the borrower, they see you as the problem. Your attorney may tell you they will do the modification for you. But if they do not specialize in loan modifications, they may not know what the banks are agreeing to in todays market. A realtor or mortgage broker may offer to modify your loan, again you want to make sure they are doing this on a consistent basis. There are also third party companies that specialize in loan modifications. They are dealing with the banks on a daily basis and know exactly what the banks are agreeing to. Even to the point where they know the differences between what each bank will agree to. I relate this to working on my car. I have no knowledge about why my car works when I turn the key, so when I have a problem with it I dont try to fix it myself. Instead, I take my car to an auto mechanic that works on the type of car I drive. Why not do the same with your mortgage? Your house is likely your most valuable asset so dont put that in jeopardy by trying to save yourself a few bucks and negotiating with the bank on your own. The specialists know exactly what they can do. For example if you call the bank, they may offer you a forbearance. A forbearance means you will make an additional monthly payment for a period of time to make up the missed payments. This means not only do you have to make your regular monthly payment, you have to make an additional payment to the bank. If you were having trouble with the monthly payment, how are you going to make the additional payment for the forbearance? When you have someone who specializes in loan modifications, they will negotiate to try to keep you away from having the forbearance. The specialists will work to get you a fixed rate for the entire period of the mortgage so that it never adjusts. Before you speak with the bank, look into all of your options. Someone who represents the bank is not working for you, they are working for the bank. Make sure they represent you and are working in your best interest. Speak with the experts and find the person that specializes in loan modifications. They are working for you to get you the best outcome possible.About the Author:
