The Top 5 Myths About Home Loan Modification

Home loan modifications have always been around, but most people don't even know they existed until recently. Loan modification is quickly becoming a household word, commonly used and understood by almost everyone. And yet there are many misconceptions and myths about home loan modification that are still commonly held.

Myth #1: You have to be late on your payments to get a loan modification.

The truth is that you don't have to have defaulted in order to be granted a modification. You just need to prove to you lender that you are in imminent danger of defaulting because of your financial situation, and you can be granted a loan modification.

Myth #2: Lenders would rather foreclose than modify your loan.

This is absolutely not true! Lenders lose a lot of money whenever a house is foreclosed, especially in today's wilting housing market. They have so many foreclosures on their hands right now that they definitely would rather adjust your loan terms and see successful payments. In fact, this is probably one of the best times to get a loan modification, especially after the passing of the President's Making Home Affordable plan.

Myth #3: Loan modification will hurt my credit.

It really depends on the type of loan modification you get, but in general modification will not hurt your credit. Furthermore, you aren't required to have good credit in order to obtain a loan modification. Just a steady job and proof of economic hardship should be sufficient.

Myth #4: You can easily get a loan modification by contacting your lender.

While you're free to try it, going it alone is not advisable. Use a financial counselor to be your advocate. Choose a counseling company with legal representatives who will work for you and know the laws better than you do. Letting them work it out with your lender will get you the best solution.

Myth #5: If you've already gotten a foreclosure notice, it's too late.

Again, foreclosure is not a profitable option for lenders. They send these foreclosure notices out not because they want to foreclose on your house, but because they want to impress on you the importance of paying up. While waiting until you're extremely delinquent limits your options for modification, it certainly doesn't preclude modification.

Stopping the foreclosure process on your home can be done with loan modification. There are a lot of myths about home loan modification swirling around homeowners right now, but knowing the facts can help you to stop foreclosure and keep your home.

Lindsy Emery, "Myths About Home Loan Modifications" , Loan Modification Guide and Resource