With so many people unemployed or underemployed during the 21st century, you are quite possibly one of those in need of loan modification services. Once you realize you have these financial issues you need to find lenders who are interested in helping homeowners with financial problems remain in their homes. If you are struggling to make your mortgage payments, you should conduct some research into loan modification before you decide to file bankruptcy.
Bankruptcy or short sales seem to be the first things people consider when they have financial set backs, especially when it involves making their mortgage payments. The problem is that both of these options leave black marks on your credit history for several years, and new bankruptcy laws that were approved several years ago make it almost impossible for most people to be approved for filing—you must be in dire financial straits in order to qualify. The other problem with bankruptcy is there is no reduction in payments; it only succeeds in bringing your account up to date and thus avoiding foreclosure.
When you are facing financial difficulties do not look at bankruptcy as your only solution but instead conduct some research about loan modification services instead. This process will not be beneficial if you have bills other than your mortgage, but it will at least prevent your lender from having a reason to foreclose on your house. While you are weighing your options, keep the following in mind:
Lenders must lower the interest rate on our mortgage loan so that the payments remain less than 38 percent of your gross monthly income
Under the government-backed loan modification program, the government will further subsidize the loan to reduce your payments to a maximum of 31 percent of your gross monthly income
You can add all the closing costs associated with your loan modification to the amount you finance with your new loan
The interest rate on your new loan may be as low as 2 percent and sometimes even zero in order to achieve the payment schedule required by government regulations
While loan modification is the perfect solution for those who are experiencing severe financial difficulties, the reality is that not everyone qualifies. One of the hard and fast rules of the program is that the lender must be able to show an increase in cash flow after loan modification. Another provision of the program is that the homeowner must be able to provide proof that he has enough income to make the mortgage payments after loan modification. While it may look neat and tidy on the outside it is not advantageous to either lender or borrower if the income sources do not justify implementation of a new lower even though the payments will be lower.
In order to save time and money you should begin researching potential loan modification services instead of waiting until you are faced with a potential foreclosure. The sooner you are find out whether you qualify for loan modification the more time you have to look for other options if necessary. When you wait until your home is in foreclosure, you run the risk of not qualifying for loan modification; your only options at that point are refinancing your loan with a different lender and filing bankruptcy.