Mortgage Loan Modification: Do It Yourself? Or Hire a Company?

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Last year almost 2 million Americans lost their homes to foreclosure.  In 2009 millions of more frustrated Americans will be joining the foreclosure club unless they take action to reduce their mortgage payment to something more affordable in their budget.  But how does one change a mortgage? The best approach is to talk with your lender about a mortgage loan modification.

 

What is a loan modification?  It is a process where the borrower and lender re-negotiate the terms on the mortgage, or more specifically, the promissory note, such as the interest rate, length of term, or even add a balloon payment.  You may wonder why one would engage in a loan modification.  Mortgage modifications are most often performed when a borrower has a cash flow issue and needs to reduce the size of the monthly payment.

 

Loan modifications are not new to lenders.  However, getting them to agree to a loan modification request can be challenging and more often than not, a loan modification request is denied.  Why?  Lenders lose money with modifications.  It takes time and money to underwrite the loan modification details, and ultimately they make less money if they lower the interest rate. 

 

However, a mortgage loan company can be willing to consider a loan modification, especially if the borrower is in default and foreclosure is on the immediate horizon.  Lenders know that a foreclosure is a losing proposition for them financially because of the great expense in the form of attorney fees, lost interest, short sale, etc.  So, if you are having financial difficulty paying your mortgage you may be in a prime position to re-negotiate.

 

Hire a Loan Modification Company

 

Most average homeowners do not know the first thing about interest rates, amortization, and loan financing in general.  Can they get help to secure a reasonable loan modification?  Absolutely.  Loan modification companies are a special business whose goal is to assist homeowners with getting the best loan modification possible. 

 

There are many advantages to hiring help with your modification:

 

• Contacts – Most home loan modification companies have direct contact and good relationship with the lenders loss mitigation department, especially the bigger lenders around the country.  By using a loan modification company, you get the networking aspect that helps smooth a modification process.

 

• Knowledge – Loan requirements change frequently from lender to lender.  Having an expert loan modification company assist you can make the process shorter, as they will know what you need to provide to the lender.

 

• Results – A mortgage modification company can negotiate the best possible loan deal for you. 

 

But are all loan modification companies reputable?  Not at all.  At the first sign of foreclosure trouble many homeowners are bombarded by “saviors” claiming they can help stop foreclosure.  Many of those companies, however, are dishonest and they are ready to take advantage of unsuspecting homeowners in dire and desperate financial trouble.  It is important to check the reputation and take extreme caution when hiring a loan modification company so that a homeowner can get relief from eminent foreclosure while not getting taken advantage of.

 

Saving one’s home from foreclosure is an important process. It can be stressful when dealing with uncooperative lenders.  But with the right help a homeowner can save their home with a strategic loan modification.

Article Tags: Mortgage Loan, False False , Loan Modification

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