Mortgage Loan Modification Might Help You Keep Your House

Are you falling behind in your mortgage payments? Has the bad economy affected you deeply? Are you afraid you might lose your home? A mortgage loan modification might be the answer for you. The difference between a mortgage loan modification and refinancing your mortgage is that when you refinance, you are actually getting a second loan, hopefully with lower interest rates. A new loan will hopefully either lower your payments; help you pay off the loan sooner, or both. A mortgage loan modification, on the other hand, is a revision of the terms of your current loan, hopefully with better terms for you.

You may wonder why a bank would give you better conditions than your loan currently offers, with a mortgage loan modification. What is in it for the bank? It's because of the bad economy. A bank would often rather get some money than no money, through foreclose. Foreclosure proceedings can cost a bank a lot of money.

According to the website, http://loanworkout.org, if you are falling behind on your mortgage payments, your first step should be to determine if your loan was legal. If it was not, you have the right to cancel. A mortgage attorney should examine your loan papers to find out if your loan contains any Truth in Lending Act violations or violations of RESPA rules. You should also show the attorney a written life of your loan history so he can see if there were any bogus charges or fees and that there was no fraud involved. An attorney could also determine if any appraisal fees that were inflated and can calculate the loss of your property value.

An attorney may determine if the interest rate you are paying are the same you were quoted, if you are paying the same monthly payments you were quoted, and if you have a prepayment penalty and were told about it. Examine your "Right to Cancel," which gives you three days to cancel your loan after you sign the loan documents. If you are not told about this, you have three years to cancel, by law.

If your lender has not violated any law, you can contact him to ask about the possibility of getting a mortgage loan modification. Only your lender can modify your loan. If you are falling behind in payments, don't avoid the problem.

According to the website, www.ehow.com, before contacting your lender, you should determine the state of your finances. How much money do you receive monthly? How much are you paying in bills? Can you cut costs anywhere? A nonprofit counseling service, such as Consumer Credit Counseling can help you.

After taking those steps, you should contact your lender and tell him about your situation and what you need. Your lender will ask when you can pay off your loan, eventually, and you should be prepared to give an answer. If you think the financial hardship you are suffering is only temporary, ask for the postponement or forbearance of payments for a few months, until you recover.

Did your interest rate go up, because it was adjustable? Did your payments go up as a result? Ask for a mortgage loan modification. You will need to demonstrate the financial hardship you are in, show a complete financial history, and detail your monthly income and expenses. It would be helpful if you could demonstrate some kind of financial cushion you would be able to have, if you receive a modification to a fixed rate mortgage. Demonstrate you would find enough income to comfortable pay the modified loan every month from some income somehow, perhaps through a second job.

It would also help if you could repair your credit in some way a little before attempting to get a modification. Your loan rate could be a little higher, if you have bad credit. If you do obtain a mortgage loan modification, you should make certain you make all your payments on time. Banks now receive incentives from the government to do modifications for Americans with financial hardships.

According to the official government website, http://www.hud.gov/, late fees are waived in loan modifications. The HUD website also states that a homeowner being unemployed will not automatically disqualify him from getting a mortgage loan modification. That is because a review of household expenses and income can determine whether or not there is enough surplus income to make payments.

If you are experiencing a financial hardship because of the bad economy, a mortgage loan modification might be one answer that could help you keep your home.

Citations
Loan Modification Tips , No author listed, Loanworkout.org
How to Negotiate a Mortgage Loan Modification With Your Lender, by Onelove1, eHow editor, eHow.com
Loan Modification Frequently Asked Questions, no author listed hud.gov