So what is a loan modification? Well, it is the modification to an already existing loan which has been made by the lender, because a borrower has been unable to repay the loan over a long period of time. Generally a loan modification involves:
- A different kind of loan
- An extension is granted so the loan can be paid back over a longer period of time
- The loan’s interest rate is reduced
- The Principal Mortgage balance can be reduced
- Or any of the above three options can be combined
The default cost is generally high so modifying the loan is an option that the lender may choose to take in order to get their money back.
When it comes to loan agreements there are two loans that can often be confused with each other. These are the loan modification agreement and the forbearance agreement, the difference between the two agreements is as follows:
- Forbearance agreement – this is an agreement that will provide the borrower financial relief in the short-term when financial problems are a temporary thing.
- Loan modification agreement – is a solution for borrowers who are in a long-term financial struggle and will never be able to pay back their existing loan.
Expert Loan Modification help is valuable. Some programs only allow you to apply once within a certain period of time. It’s important that you achieve success from the start otherwise you may not have enough time for another loan modification application review. A knowledgeable Loan Modification and Foreclosure Prevention company such as LoanModDepot.com can offer you options and deliver results unlike any organization.
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