How to Modify a Home Loan

What is a Home Loan Modification?

For the vast majority of homeowners, the truth is a home isn’t really owned, exactly. There is a mortgage, funded by a bank, which must be paid for every month for the life of the loan.

Some of these mortgages are as long as 10, 20 or even 30 years and can take a literal lifetime to repay. A home loan modification is basically a change to the rates or other terms for a home mortgage such as this.

Any changes will need to be agreed upon by both the lender and the homeowner or other person responsible for borrowing the money. This ensures that neither party can just make addendums or additions to the contract without the other knowing ahead of time.

Not everyone is going to meet the requirements to qualify for a home loan modification but for homeowners who feel they’ve been duped with ridiculous rates or know they’re stuck in a bad deal, there are ways to beat the system.

Who Would Want a Home Loan Modification?

Just about anyone will find at one point or another, interest rates, payment schedules or other aspects of their home loans could use some adjustments. Maybe someone lost a job and can’t continue to pay at the same rate as before, or there’s a new source of income and the loan could potentially be repaid faster.

These methods offers a way to save one’s credit from being destroyed by missed mortgage payments or a bank foreclosure, but only if the lending agency is interested in working with the homeowner.

Some banks are surely out to get people and would sooner snatch up a distressed property then allow someone to make reduced payments. Institutions such as these are often responsible for issuing predatory loans as well, charging obscenely high rates for small amounts of money to be repaid over extended periods of time. While the government is cracking down on agencies like these, families still find themselves stuck in bad deals on a regular schedule.

If credit rating is the major consideration, consider things just a bit longer. As long as the mortgage on a property is up to date, it is only having a positive impact on the owner’s credit scores.

If the payments should fall behind, doing something to make them up, even at reduced rates, will save a credit score. A full foreclosure with the building being seized by the bank which funded the loan will irreparably harm a person’s credit. Allowing a home loan to become this overdue is ill advised.

Modifications made to a home loan will not matter if the new information isn’t reported to proper agencies. People who believe they’re making right by paying a smaller amount may actually be getting ripped off, another practice of shady banks and lending agencies.

There are a horde of concerns and horror stories which go along with clueless homeowners who got railroaded in their greatest time of need.

The only consistently good way to deal with a bad home loan situation is by consulting a lawyer to handle the home loan modification application.

Getting good legal representation is the best method for ensuring one’s interests are protected in often tense negotiations. This is not something to do alone.


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