There are a number of benefits that you get when you are able to arrange a loan modification and they help you in the following ways.
One way to reduce the monthly payments is to extend the period of the loan and that does not affect the interest or the principal amount. The way it works is if you are paying a certain amount over a certain period and you extend the repayment period by 10 years then you will be paying approximately 10% less per month and depending how much you are paying monthly that could save you up to $1000 per year and a loan modification consultant can help with this.
Paying less Interest
Loan Modification depot can provide loan modification help to reduce the interest for a certain period of time and this is normally a temporary measure. This method will help the home owner through a temporary financial crisis if they are ill or temporarily out of work. If you want the interest rate reduced permanently the loan will need to be refinanced.
Depending on how much interest rate is reduced you could save up to almost a $140 a month if the interest rate was reduced to 4.5% and you are paying in the region of $900 per month.
This is done in two ways one being principal forbearance and principal reduction and the difference is as follows:
- Principal forbearance means the lender will forgive the interest for part of the principal and in effect, they do not collect any interest on part of the principal. However, this interest will be paid when the house is sold or refinanced.
- Principal reduction is exactly that the amount owing is reduced and there is no expectation of repayment.
This is a more effective way and the money you can save is as high as $150 per month
Paying extra Debt
Most people do not only have one debt repayment because often they need to pay for a car, credit cards and student loans etc and this extra money can be used for that and to find the best solution for you use a loan modification company like Loan Modification Depot