Financial hardship is facing many people these days, especially those people who are homeowners, and out of everyone effected by this they are the worst hit. Facing financial hardship is leading to many homes being foreclosed on and it is because of this that more and more people are looking to their lenders for help in the form of a mortgage modification.
Unfortunately, there are many lenders that are not prepared to help these homeowners, but for the few who are a loan modification seems to be the answer they are coming up with.
Credit and is it affected
If you are a homeowner taking part in HAMP, a dip in their credit score will not be noticed, it is due to certain requirements put in place by the government, which has lenders reporting such problems in a certain way, so they do not cause harm to a person’s credit score. However, saying this does not mean that a mortgage modification will not have an impact on your credit score either way there is no guarantee.
Loan modification alternatives
Not many people qualify for a loan modification, and it is because of this that other alternatives have had to be made available. So rather than only having the option of foreclosure due to failed mortgage payments, other options have been put in place. These include:
- Short sell your home: this is where you and the bank come to some sort of agreement, for you to sell your home which is less than the amount you currently have outstanding with the bank.
- Deed-in-lieu of foreclosure: this is where you give your home back to the bank or lender.
- Forbearance: your loan payments are reduced or suspended by the bank for anything up to 90 days.
- You could find yourself a tenant who is willing to rent your home and then you can use the money to pay back your lender.
However, if you do find yourself in one of these predicaments, then you should seriously consider talking to an expert about which, if any of the above situations would be the right thing for you to do.
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