There’s a wide range of options available for those looking for loan modification plans to help them save their homes from a foreclosure. These programs are provided to help the homeowners select the most ideal option as per their individual situation. While some programs offer longer payment terms and lowered interest rates, others can defer your capital payments for a certain period of time until you get stable financially. Below are some of the most common loan modification plans offered to the homeowners these days.
This option provides a temporary postponement of your payments until you are financially buoyant to continue. It’s more ideal for those who have short-term financial problems with assurance of financial improvement on the horizon. In this program, the loan payment is deferred and added to the end of the term, increasing the time required to offset the debt. However, this option requires payment of higher interest in the long run.
This is another option where the mortgage company extends the number of years required to offset the debt. Since the repayment time is extended, your interest rates will be lower on a monthly basis but higher at the end of the payments. This will be a good option if you’re having temporary financial challenge due to high medical bills or temporary loss of job.
Refinancing the loan
The mortgage company may decide to swap the current loan plan for another one. The new loan plan will begin from the last time you made payments on the previous loan. Although the new loan comes with lowered interest rates, its payment duration will be much higher.
Deferred capital payment
Another loan modification service that banks usually offer is to allow you pay only the interest of the original loan and temporarily hold off the capital payments. This option does not allow you to build your equity on your mortgage.
The above are some of the most common loan modification programs offered by mortgage banks and loan modification companies. The most ideal option for you will depend on your financial situation and how soon you can get back on your feet to resume normal payments. The main goal is to make payments easier for you and help you save your home from a foreclosure.