A loan modification is not refinancing nor is it debt consolidation. A loan modification is an adjustment of the terms, for which the original loan was set upon, to make monthly payments more affordable for the borrower. For many borrowers the original terms of their loans were appropriate for their monthly budget; they still had disposable income at the end of the month and were not scrapping to get by. The reality is many borrowers have experienced economic hardship in the last year and are in need of some financial relief.
A loan modification changes the terms of the original loan making it more affordable for homeowners to pay on their home and avoid foreclosure. There are a number of ways to modify a loan, for example, changing the interest rate from an adjustable to a lower fixed interest rate. A second way a loan can be modified is extending the period of time the borrower has to pay back the loan, (the amelioration period) extending it from twenty years to thirty or forty years. A third way is to reduce the principal balance of the loan to the value of the homeowner’s property however, this option is rare.
A loan modification is best for all parties involved. To find out how you can do your own loan modification refer to the Basic Guide to Do-it-Yourself Loan Modification. This will provide you with step by step instructions, and will also prepare you for what to expend from lenders.
Also be sure to check out the Loan Modification News site
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment