Although, decreasing the amount you pay each month may seem like a great idea at the time, there are other problems that then become apparent. Such as paying more interest as the years go by. However, if decreasing your payments helps to stop you from losing your home, then it may be worth it in the end. Although, this may be a good idea make sure you are fully aware of what the cost will be to you and if that is the only option you have available. Try not to think about the short term because it is the long term consequences that you need to be concerned about.
Modified loan options?
One option is called Tack it on the back; this is an option that is used when people are only just behind on their repayments. What the bank does is it takes the past due payments and applies them to the end of the loan. The following is an example of this.
A homeowner has been given a mortgage of $200,000, and they have fallen behind with their repayments of $1,500 for the last three months. The reason they have got behind with their repayments is because of a job loss or some other financial problem, but since then their income has finally been reinstated. Therefore, due to their income improving the bank can now put the past due payments at the end of the original loan and this then enables the homeowner to have a fresh start.
Avoid Foreclosure and get a loan modification with lower payments.
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