Owing to the global recession, job losses are mounting and an increasing number of Americans are struggling to meet their monthly mortgage payments and are facing the possibility of losing their home to foreclosure.
However, there is now a real viable alternative in the form of loan modification.
This article aims to elaborate on the basics of how to modify a mortgage loan.
President Obama's 'Making Home Affordable' plan places a large emphasis on loan modification.
As such, the government and lenders alike have released a number of guidelines explaining how to modify a mortgage loan and are encouraging lenders to simplify the process by offering financial incentives to lenders getting borrowers on a program.
A loan modification is essentially a process by which a borrower and lender negotiate new terms on an existing loan in such a way that the monthly payment is made affordable for the borrower.
Although it might sound a little bit like refinancing, its main differences are that it does NOT take out a new loan and, in addition, those with poor credit are also eligible.
When it comes to asking how to modify a mortgage loan, the first piece of advice will always be to research the eligibility criteria of your specific lender.
Some, for example, might only offer the program to those who are already in arrears on their payments, while others open the applications to borrowers who are not yet delinquent.
Asking how to modify a mortgage loan leads fundamentally, once you know you qualify, to the application process! You simply must fill out the application in detail.
Incomplete applications will win you no favors from your lender.
The application should be accompanied by the support financial documents and, importantly, a hardship letter detailing how you came to face such financial struggles and how you can adjust to ensure you can meet the new monthly payment every month.
The application is vital.
Spend time on it!