Loan modifications are a valuable tool to help homeowners keep their home. Here are five things to keep in mind if you are considering modifying your loan.
- A modification is a change of one or more terms in your loan in the hopes of getting a more affordable monthly payment or reinstating the loan you currently have;
- There are a variety of modification programs you may be considered for. Eligibility for each program depends on many factors including the type of loan, who the investor is, and the present net value, among others.
- Principal balance will not always be reduced. The purpose of modification is to get you to an affordable payment, which can be achieved not just by reducing your principal but also by lowering your interest rate, extending the term of your loan, or deferring a principal reduction.
- You must have at least one source of income to qualify for a modification. If you are unemployed you may receive an unemployment forbearance plan, which reduces you payment for a set period of time. This is not a permanent modification, but it provides relief during your job search.
- Modifications are a long and arduous process, you must be patient and promptly respond to any requests for information the bank or your attorney may send your way.