Modifying a home loan: Guide
If you look around you at the value of housing falling and the number of unemployed or underemployed people rising, you would understand the increasing need for these people to have their home loans modified.
By modifying one’s home loan, you make a permanent change in all or some of the terms of your home loan, thereby making it easier for you to make your monthly payments to the bank, particularly if you’re going through a rough time. These changes refer to a reduction in interest rates, increasing the duration of the loan, or giving a different kind of loan or a combination of these.
Your bank will be interested in modifying your home loan because they usually sell foreclosed homes under the real value of the loan they gave out, so it is still in their interest to modify your home loan. For you, it helps to have your home loan modified because you own your home eventually, which is better than renting one.
loan modification
Advantages of modifying your home loan:
It does not affect your credit rating.
You can avoid the fear of foreclosure and continue to live in your home.
Your home loan is lengthened instead of putting you through trying legal proceedings.
The terms of your loan are modified to suit your financial situation.
You are spared the shame of being declared insolvent.
Pointers to help you with loan modification:
Don’t give up easily: Just because you hit a rough patch financially doesn’t mean that you give up your mortgage and walk away from it completely. Work out a home loan modification, instead.
Are your finances in order? Ensure that your finances are in order. You will have to prove that you are in dire straits financially to get a home loan modification. For this you will have to show your statement of accounts to your banker.
Find out all you can about the home loan modification procedure: Research all you can about this process, its advantages and disadvantages.
Choose the right home loan modification company: Now that you’ve done your research, it will be easy for you to choose the right home loan modification company. Check that it has a good reputation in the market and has enough industry experience.
How to modify your home loan:
According to interest rate: Now that home loan rates hover between 5 and 6 percent, you can surely speak to your banker and work out a lower bank rate by just a percent or two. If you can, this can save you a lot of money each month in mortgages.
According to tenure: Usually, the tenure of a home loan is about 30 years. So, by extending the duration, you would really be paying a lower amount for a longer duration.
According to home loan amount: You can have your home loan amount modified too, since now big lenders are so keen to have you continue to stay in your homes that they even write off some the loss of home value. This is often referred to as a principle reduction. By doing this, your bank will give you a mortgage to the same house for a lower amount. This will reflect your home’s true value.
According to home loan type: To change your home loan type, it would be best if you could change from an Adjustable Rate Mortgage (ARM) to a fixed-rate loan. This would also help reduce the interest.
Banks are looking to modify mortgage loans, so approaching your lender for this will not be difficult.
By Mithi Chinoy
Buy Loan Modification For Dummies (For Dummies (Business & Personal Finance))
Amazon.com Price: $11.38 (as of 2010-02-09 08:34:55 GMT) Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon.com at the time of purchase will apply to the purchase of this product.
The crucial information you need to secure a reliable loan modification and save your home
Behind on your mortgage payments? Worried about losing your home? Don't panic. Loan Modification For Dummies gives you the reliable, authoritative, easy-to-understand guidance you need to apply for and secure a loan modification that lowers your monthly house payment and keeps you in your home.
This practical, plain-English guide leads you step by step through the loan modification process, from contacting your lender to applying for a loan modification, evaluating the lender's initial offer, and negotiating a modification that lowers your monthly payment while helping you catch up on any past-due amounts. You'll learn how to communicate with your bank or loan servicer, recognize and avoid loan-modification scams, and find a knowledgeable loan modification specialist, if you choose not to do it yourself.
Advice on determining whether you're likely to qualify for your lender's loan modification program
Guidance on preparing and submitting a loan modification application that improves your chances of success
Helps you figure out a monthly payment you really can afford
Tips on modifying your loan even when you owe more than your home's current market value
Negotiation advice for securing the best possible terms and lowest monthly payment
Resources for contacting your lender, obtaining free or affordable third-party assistance, and getting government agencies on your side
Read Loan Modification For Dummies and start saving your home today.
Product Details
ISBN13: 9780470501993
Condition: NEW
Notes: Brand New from Publisher. No Remainder Mark.
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