What Are The Most Common Reasons Someone Would Seek A Mortgage Modification?
The most common reason is people have an event in their lives that causes them to fall behind in their mortgage, generally a job loss or an illness where they can’t work, and so they start to get behind in their mortgage payments. They seek a modification to try to set up a plan where they can save their home and maybe reduce the payments and be able to afford their home.
During the recession, a lot of people had less income than before the recession started, so even if they’re back to work, they’re making less money and they need to have their mortgage payments reduced in order to be able to afford their homes or save their homes.
What Are The Different Types Of Loan Modification Programs Someone Might Be Eligible For?
There are several different types of loan modifications. There are the ones you’ve heard of, the harp program, home affordable refinance program. There are all kinds of different programs out there but essentially the modifications are determined by the bank that you’re happened to have your loan with. If you need a loan modification, you need to talk to your bank and see what programs that particular bank participates in or may have available to you.
Unfortunately, a loan modification is a voluntary process on behalf of the bank, so there is nothing you can do to modify the loan but different banks have different programs and the best thing they do is they contact your bank and find out what programs they participate in that may be available to you.
How Is A Mortgage Modification Different From A Mortgage Refinance?
Mortgage modification is actually a changing of the terms of the original loan. When you first got the loan, either bought the house or refinanced the house previously, you’d sign a contract with the mortgage company where you agree to make certain payments at certain interest rate for a certain number of years.
In modification, you’re going back and you’re asking the bank saying, “Hey, something has changed in my life and I just can’t afford these payments anymore. I need you to change your terms of loan here,” and that’s why it’s a voluntary process because it was originally a contract between you and the bank and the courts can’t change your contract just because one party decides they can’t afford it. So, the loan modification is actually changing of the terms of the original contract.
The mortgage refinance is basically paying off the entire loan and getting a new loan, starting fresh with an entirely new agreement with the different lender. If you’re not too far underwater in your house, a refinance may be an option to you if you’re up to date on your mortgage or you have good credit. Unfortunately, most people seeking loan modification are behind in their payments because that’s what happened and they fell behind because of a job loss or an illness and now they’re seeking to try to hold on to their homes.
What Are The Obvious Benefits Of Loan Modification? Are There Any Downsides?
The huge benefit to a loan modification is the terms of loan will be changed to something that you can afford. The whole point of a loan modification is to keep you in your home on terms that you can afford. So, if you can get a loan modification, it’s absolutely the best way to try to save your home.
Is There Any Disadvantage To A Loan Modification?
Unfortunately, the disadvantage of a loan modification is you can’t force your bank to give you a loan modification. So, if your bank won’t work with you or tells you they will give you a loan modification, you’re kind of stuck with going with other options. But the main benefit of a loan modification is that it will allow you to stay in your home with the payment that you can afford.
If you have questions regarding Loan Modifications, call the law office of Attorney James Logan for a free initial consultation at (410) 243-1508 and get the information and legal answers you’re seeking.