What is the Loan Modification Process?

A loan modification process is a step taken to adjust the terms of a mortgagor’s loan, which ensures that the loan is reinstated and alloys an affordable mortgage payment. For first timers, it can be a rigorous process and it will feel like when you’re applying for the mortgage initially. If you are looking to prevent your home from foreclosure due to inability to meet your mortgage payments, the most ideal thing to do is to get a loan modification.

What are the steps for loan modification?

The first thing to do here is to meet a housing counselor for advice. They will tell you what you need to successfully carry out the loan modification process. Before any loan modification options is approved, the homeowner needs to provide proof that they have been in a financial hardship, which has affected their commitment to pay for their earlier mortgage. Examples of these hardships could be family emergencies, unexpected medical bills, or unemployment. Once you can bring proofs such as unemployment benefits paperwork, bills, or paystubs, your loan modification application is likely going to be accepted.

What other information is needed?

Your particular situation will determine the extent and types of document you may be required to provide. On a general note, the mortgage servicer will require you to provide your income tax returns for the past two years. Other information required will be communicated to you and your housing counselor will be needed to help you get those things ready.  The loan modification may take the form of extension of terms or reduction of your mortgage interest rate. It’s important to select the most ideal option that will be better for you. After the loan application is approved, a written notification will be sent to you, which will indicate the terms of the new loan, payment amount as well as the new mortgage rate.

Conclusion

Loan modification service is the best way to go if you have fallen behind in your commitment to make payments for your loan. Although it can be a time consuming and stressful process, it’s definitely the best option if you want to save your property from foreclosure.