You may be facing a foreclosure because of some unfortunate happenings that have created a financial crisis. The day of reckoning is coming and you have decided to put a bet on a home loan modification so as to save your precious home. This is a critical process and you wish to make everything right to grab that jackpot. You need to hire a loan modification advisor to help you with the application. However, there are several things you need to put in order so as to receive the modification of your loan that you might be able to pay within the scheduled time. Here is some easy advice that can help you craft a winning strategy.
Understand it is not in the best interests of mortgages to go for a foreclosure
The greatest asset in negotiating a deal is the information you have about the other party on how high or low the movement can be. This will help you in playing your card properly and you can get a better deal than what you have anticipated. When you are writing an application, you will be offering the lender a deal that will make a better sense than a foreclosure. Do simple research on how much you will lose in case of a foreclosure and craft a deal that will be favorable to your financial circumstance but also acceptable to your lender.
Prepare your offer properly
To approve an application for a home loan modification, your need to have something to offer better than a foreclosure. You need to craft a credible strategy on how you will meet the financial obligations, and indicate the effort you have made and you are currently making to change the situation. Get clear information on your current financial status and how it is destined to improve in the future. However, all this information must be truthful and with this, it’s possible to convince your creditor.
Anybody facing a financial crisis is always faced with an arduous task of developing ways to alleviate the problem. Many would try to find grants from relatives and friends or go full blast in finding any job with the objective of mitigating the problem or eliminating it completely. Financial crisis may result in your inability to pay your bills or loans that can ruin your life or your investments, which you might have worked very hard for to get. Therefore, you must utilize every strategy available to deal with the problem, whether by trying to increase your income or reducing your spending. However, loan modification is a great opportunity in this regard.
Another way that can save you from bankruptcy
If you are facing heavy financial burden and unable to pay your loans, you might be on the brink of a bankruptcy, a situation that might not be good for you. Financial advisers might inform you seeking a loan modification is a better way of reducing your financial obligations and ultimately saving you from a bankruptcy. You can get loan modification help from the loan modification specialists who can help you craft a better strategy on how to apply and succeed. This is an opportunity that can save your investments.
It’s a new source of income
One way of dealing with a financial crisis is increasing your income. By doing this, you will be able to reduce pressure on your budget. There are some basic items that you cannot live without, as they are needed no matter what happens. If all the incomes go to clearing debt obligation, you will likely suffer. You need to apply for a loan modification mitigation, which is a strategy that might reduce your debt obligations. This may leave you with more cash to spend for the basic items.
There are many homeowners who do not like applying for a loan modification but most of them certainly do not want a foreclosure either. They could be too old to consider a 30 to 40 year repayment program just to lower the mortgage repayments. Moreover, some will not even like to consider a 2-year extension due to their age.
Most people would like to get loan modification help so as to allow them pay less; but between the lender and the homeowner, a foreclosure is not an favorable option because no-one wins in that situation.
Repayment has a niche
There are those people who had been out of work for some time but they would like to start repaying the loan after getting a new job. The way the repayment system is structured is that instead of paying a lump sum of the arrears, they negotiate to pay extra every month; allowing the homeowner to catch up with the mortgage. Another example is when there was only one person working but currently there are two, so they can afford to pay the higher premiums.
There are lots of different scenarios, like perhaps the cottage in the yard is rented out that helps have an extra income; but at the end, the person is able to pay off the arrears without having to extend the loan period. If you find yourself in this situation, approach the Loan Modification Depot that has expertise in providing the advice you need.
The amount paid every month depends on the new financial status of the borrower and it could be as high as double based on how much can be afforded. Loan modification specialists are able to give the best advice in this regard.
The difference between reinstatement and modification is, the first option requires you to pay the arrears whereas modification requires changing the payments to suit your situation.
How Does it Work?
You will get a letter from the lender that you need to pay back all the arrears, penalties and legal fees, which is commonly known as a reinstatement of the loan. If you are unable to do so, engaging a loan modification attorney to modify your loan might be the best option.
The lender will make these demands because you have defaulted on the terms. If this huge amount is not settled, they will start the foreclosure procedure. In order for you to keep your home, you need to consider modifying the loan.
The problem is that you might not be able to pay this huge sum at once; therefore, you need to change the wording of the loan agreement known as loan modification. Getting the assistance of a loan modification company, such as Loan Modification Depot is probably the safest way to negotiate a new loan.
Why Lenders Consider a Loan Modification
You might be thinking that why not just sell the home, but a loan modification expert will explain there are a number of expenses the lender will face.
- Foreclosing on a home requires to go through the court, which is expensive
- The market value of your home is probably not as high due to the current economic situation.
- Looking after the home while it is empty and paying a realtor to sell the home attract commissions and other costs.
- Lenders also borrow money to finance their business; therefore, this needs to be paid back.
- It cannot be used as an asset while it is on the market, creating criticism from the government regulators.
Basically, the lender wants their money back which is not going to cost them and with loan modification options, they are able to do that. During the loan modification mitigation, they will be able to change the terms to suit your situation; enabling you to keep your home.
The appeal to lessen your monthly expenses could convince you to falsify the records when you will apply for a loan modification, but this could have costly long-term effects.
Loan Modification Applications
In 2009, the US government instituted stimulus packages for homeowners in order for them to salvage their homes. But it is important that the records are not falsified because these could have long-lasting effects and even lead to criminal indictments. So the loan modification attorney should get accurate information from the applicant.
These agreements will eventually find their way to the government offices and the loan modification inspector will require a tax information release form from the applicant. For example, in order to secure the modified loan, the applicant might overstate their income which will be revealed as soon as the tax return is inspected.
Loan Modification Companies will be the best professionals to advise the homeowners, especially those who earn bonuses. Once you approach companies like Loan Modification Depot, you need to be as truthful as you possibly can because the information will eventually come to the surface.
However, if the tax department gets an idea that the borrower has falsified their records in order to obtain a loan modification, it could be audited. If the borrower is found to be guilty, the applicant may have to pay hefty fines or if it is serious enough, there could even be a jail term.
The loan modification consultant will advise you to be truthful because it is not only the IRS you will be trying to avoid getting into trouble with, but if you are found to have falsified your records during the application process, you could even lose your home if the application is denied.
A hardship loan modification letter may help you get your loan modification application approved. For this reason, it must be written in a way that meets the main objective. You should try to make it persuasive so that the lender allows you to earn those favorable interests. You can hire and consult a loan modification professional on how to write an effective hardship loan modification letter. Everything may lie on how you craft your letter indicating you indeed deserve the service. Certain factors need to be considered so as to write a convincing hardship loan modification letter.
An example of what a good letter contains
To be successful, you need to write a letter that is short and straight to the point. Articulate your points clearly by stating your current situation categorically. You should try to prove that it is not your fault but you are a victim of circumstances. It is better for you to demonstrate how you plan to carry out the new obligations without failing. This information might help the lender make a considerate decision if there is a compelling case that might support your action. To be successful, ensure your information is brief, straight to the point and actionable.
An example of what a bad letter contains
Most hardship loan modification letters that fail to help the applicants get a better deal or loan modification restorations usually lack enough information. They are half-baked and don’t contain any substantive information that might be actionable. Thus these letters are not able to get information that can help in assessing the eligibility of the applicants. They may also not explain the reason behind one’s financial hardship or may provide unnecessary information about one’s personal problems, like alcoholism. In fact, these statements will work against you and should be avoided at all costs.
Losing your home because you have found yourself in a hardship situation and require assistance with the monthly payments, here are some loan modification tips that could help you.
When you find yourself in this situation the first thing to do is find assistance from a counsellor or a loan modification firm. They have all the experience required to ensure that you have the best chance to succeed to apply for a loan modification. It is not everyone that qualifies for these loans but loan modification experts will be able to put the best case forward
Search for loan modification companies in your area and Loan Modification Depot is one of those that you know are legitimate and have your interests at heart. Never tell them your story rather let them tell you what they can do for you.
Once you start applying these are a few guidelines that you will need to follow and the first one being is that you need to be absolutely honest. The last attitude that you would like is one of mistrust by giving false income and expenditure reports.
- You will need an accurate proof of income
- Financial statements and letting a loan modification consultant help you prepare these will help your successful application.
- You will either need your tax returns or give the lender permission to retrieve them.
- Bank statements
- All these have to be accompanied with a professionally written hardship letter
Improve your financial knowledge because even though you could have someone helping you, you need to know that they represent your interests and it will give you the confidence to negotiate with the lender to help get the agreement that you would like.
There are long term loan modification options as well a short term and ensure that you negotiate with the lender that will best represent your case.
The first payment of a loan modification depends very much on the lender and vary from one month after the agreement and sometimes two.
The reason the first payment vary is because peoples situations are not the same and these factors are taken into consideration when the loan modification specialist negotiate the new terms. Generally the first payment is due one month after the new loan has been signed because it gives the person chance to get the funds together to start the new repayment schedule.
The date of the payment is calculated from the time that loan modification service became valid. When you embark on negotiating a loan modification it needs to be serviced with as little problem as possible and in this regard some companies will even consider two months after the loan becomes valid.
No payments during Negotiation
It is important to note while the loan modification consultant is negotiating the new loan which can take up to three months there are no payments which allows the person to accumulate the funds to start paying once it is all in place. Using Loan Modification Depot and companies similar will be able to assist with delaying the payments as long as possible.
The great aspect being that once the new loan is in place the repayments will be less on a monthly basis making whole process more manageable for the borrower.
Loan modifications are in place to assist the home owner to salvage their home from foreclosure and allowing them to pay back the loan with a different set of rules. There are loan modification experts who are able to assist you through the negotiation process and ensure that the rescheduled payments are within your capabilities. The delay of one or two months will make that easier for the borrower and secure the home.
There are three main mortgage loan modification providers and they all have different benefits and qualification processes
Fannie Mae has a streamlined modification program and it caters for the people that are serviced or are owned by Fannie Mae which is a vast majority of home owners. They will only lower the mortgage repayments to 38% of your monthly income and loan modification experts will be best placed to advise how to go about applying. The method they use is to lower the interest rate and it can be as low as 3% or by extending the term of your loan. If the borrower’s situation is not very good then they will also consider reducing the principal value.
The FHA partial claim loan modification service is for those who have a mortgage program that is insured by the FHA. What happens is that if the home owner is in arrears with their payments they will put in another deferred loan and that money is used to pay the arrears. This loan will only have to be repaid once you the house is sold or refinanced.
There are lots of individual lenders engaging in loan modification restoration and modified loans and they have an agreement with the government to reduce the monthly payments to 31% of the total monthly income. They like Fannie Mae achieve this through lowering the interest rates, extending the repayment period and if necessary the principal amount owing. Engaging companies like Loan Modification Depot you will get the best advice because even though they are sponsored by the government individual private companies have their own regulations
These are three main options that a person has to arrange a loan modification and it is advisable to use a loan modification specialist.
The loan modification process follows definite guidelines and the goal is to reduce the monthly payment to the amount the borrower can afford and this is called the Waterfall Method.
This is commonly called HAMP which is the home affordable modification program and it is used to assess your financial status and if you qualify for this loan modification service and engaging a loan modification consultant will be able to advise you how to go about the process.
- The homeowner applies for assistance.
- The borrower provides all the necessary information such as total income and expenses
- It is then reviewed by the lender
- The Waterfall Method is tested and established if the person is acceptable
- If the modification is possible then the borrower could be approved
- After that there is a three month trial period before it is made permanent.
When an application is admitted the Waterfall Method will take all the following criteria into consideration:
- Monthly income
- Monthly expenses
- Cash or savings in the bank
- Other information that might be required to determine whether the person is fristly eligible and secondly whether they can afford to honour the new payments.
The first aspect that the lender will take into consideration is if the interest rate can be lowered and a loan modification lawyer will help you negotiate this because it can be lowered to as low as 2%.
If this does not meet the right criteria then the lender will consider extending the loan period to reduce the monthly payments which in turn will also reduce the monthly payments.
The last loan modification option that will be considered is to lower the principal amount being forgiven and this is called the Waterfall Method because the lender needs to follow these steps to establish if you qualify.
Using a loan modification company like Loan Modification Depot would help on how the necessary information pertaining to your financial status should be presented.
The repayments should be approximately 31% of the monthly income and if it is too low or too high the applicant could be denied.