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Home Loan Modifications. – After the economic crisis has swept the country, many families have been faced with the fear of losing their homes. If you are facing foreclosure, do not fear, you have many options.

A loan modification, for one, has proven to help many citizens keep their homes from foreclosure. Surely, it can help you out, too. The first thing you have to do is to know which are myths and truths when it comes to loan modification.

1. Creditors or the banks want you to lose your home.

- This is definitely a myth. Once their borrower’s home is foreclosed, they do not get back what they have investment. So if you are willing to make any payments, they will be more than willing to work with you.

2. A bad credit score disqualifies you for a loan modification.

- Even if you have a bad credit score, you can still qualify for a loan modification.

To be more specific, the most influencing factor that affects your qualification for a loan modification is your ability to pay not your credit score. The major deciding factor on whether or not you are eligible for a loan modification is you monthly income.

Not so long ago, only borrowers who have been delinquent in paying their monthly dues are eligible for a loan modification. This does not hold true anymore. Since there are so many borrowers who are facing foreclosure nowadays, major creditors are becoming more lenient in the negotiations to adjust the rate of mortgages. It is so much better for their businesses if they make your mortgage more affordable rather that have you foreclose on your home or file for bankruptcy.

You should also know that your creditors can file a deficiency judgment against you. A loan modification automatically stops that process. Also, it may not be known to many, when you file for bankruptcy, not only will you be paying the bankruptcy payment; you will have to pay a mortgage payment as well.

The loan modification process can be done right up to the sheriff’s sale. Again, let me stress that home loan modifications are for anyone who can prove that they have enough monthly income to support the modified debt.

So if you have just been served your foreclosure documents, do not hesitate to make arrangements to meet with your creditors and start the process of negotiating the terms of your loan modification at once. It is not advisable that you get in touch with the attorney who served the foreclosure documents, go straight to the lenders you have borrowed from.

For a successful negotiation, you have to have ample proof that you are determined to pay but you are not financially fit at the moment to cope with the existing terms of the loan. Give them a specific amount of what you can afford monthly along with proof of your monthly income. Sometimes, borrowers come to an agreement that they still could not afford just so they can stall on their foreclosure. Make sure that you agree only to terms that you are positive you can keep up with.

Once you have settled the negotiation, check the details out. If you have any questions or if you think there are errors in the document, notify your creditors. Re-negotiate again if the need arises. Remember that your creditors are more than willing to modify your loan as long as you show them determination and ample proof that you are willing and able to pay the loan back.

Inform the attorney’s office who has served foreclosure documents of the agreement you and your creditor have come up with. It would be best to do this in writing.

Once your loan modification is underway, keep your end of the agreement and always pay on time. With home loan modifications, surely you can pay off your debt sooner and you get to keep the roof over your head.

 

Tags: Home Loans Modifications