Importance of loan modification in order to retain property

by admin on July 6, 2011

Financing is essential for buying a home. Financing a home is mainly done through a mortgage loan. As you take out the home loan, you are required to make the payments as per the terms and conditions of the home loan. So, if you fail to stick to the terms and conditions of the home loan, the lender can take away your home and sell it off in order to get back his money. Mortgages are secured loans, secured against the home on which you are taking out the home loan. Home loan modification comes to your rescue in such a situation.

How loan modification helps you

Loan modification is the process that changes the terms and conditions of your home loan. That is the interest rate can be lowered and the loan term can be extended. You can do this after negotiating with your lender. You will have to talk to your lender about the problems that you are having with your finances and that it is becoming a problem for you to continue the payments. Tell that that you want to retain your home and that you don’t want to default on your payments.

If you had been a regular on-time payer, the lender might agree to your request and offer you a loan modification according to your affordability. Now, in order to make such a request to the lender, you will have to keep yourself ready with all the copies of your income and expenditures, copies tax returns of last two years, and so on. It is important for you to get a written agreement in order to keep proof that you have opted for loan modification. You should keep copies of every letter and form in order to be used as proof of the agreement if any problem arises later.

You will have to send in all of the documents of your income and expenditures and tax returns. The lender will review all of these and then start the loan modification process. The whole process needs some time and you will have to wait patiently for that. You can call your lender in order to enquire about the status of your loan. Each of the lending institution works differently and so you never know how much time it will take to have your loan modified.

As with loan modification, the interest rate lowers and the loan term extends, it becomes easier for you to make the payments. The payment amount lowers. Thus, there isn’t the fear of defaulting on the loan and so there isn’t the fear of losing your property too. so, you can see that loan modification helps you to retain your property even if you are having financial problems.

Contributed by Mortgage Community Member.

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