Are you finding it difficult to make loan repayments on time? Are you spending sleepless nights worrying that you may lose your house through foreclosure? Your fears are not unwarranted as more and more people are losing their homes to foreclosure because of the tight economic situation.
Interest rates are high and the economy is not growing at the usual pace. Loan modification is one of the four options you have to wade through such a difficult time, the other three being forbearance, pre-foreclosure/short sale and deed-in-lieu agreement.
Procedure Of Loan Modification Services Can Assist You
What Is Loan Modification?
Usually payments are made on interest as well as principal at regular intervals till the loan is paid off. If that process runs into trouble along the way due to your financial constraints, then you can take recourse to loan modification. Loan modification means a change in the terms of a loan so that it is easier on the borrower to repay.
Benefits Of Loan Modification
The change in the terms of loan can be in the rate of interest, the principal balance, or term of loan, keeping your long-term financial interests in mind. Reduction in penalties like late fee, and capping of monthly payment based on household income are the other benefits that can be had through loan modification. This way you can pay the loan without having to default on it. It stands to benefit even a lender because the cost of loan modification is usually less than that of foreclosure or default.
Hire The Services Of A Consultant
It will be difficult for you as an individual to negotiate with the lender to renegotiate the parameters of the loan. So you should hire the services of a financial consultant to transact the deal on your behalf. If you try to do it on your own you may not be fully aware of the financial and legal implications of the terms of the renegotiated contract, which will be to your detriment.
The very fact that you are opting for loan modification shows that you are in financial deep waters, so you do not want to compound that problem by creating fresh ones through errors in your negotiating and assessment capabilities.
What The Consultant Can Do For You
The loan modification consultant will thoroughly study your circumstances to evaluate whether or not loan modification is the way to go given your particular situation. It could be that other options may be suitable keeping in mind your long-term interests. Once the decision is reached that loan modification is the best option for you then they will do a complete analysis of the monthly income you are earning and the debts you have to come up with a financial package.
A loan modification request will be submitted on your behalf by the consultant to your lender or mortgage company so that negotiation with the lender can begin. The consultant will use your financial package to convince the lender that it is in their interest also to renegotiate the loan terms. Rounds of negotiations are held till a satisfactory offer is made by the lender.
Words Of Caution
Several scams have been perpetrated in the name of providing loan modification services on the gullible and unwary individuals. So it is important to be on your guard. Make sure the individual or company that you are dealing with is licensed. Do not at any point in time give them direct access either to your credit card or to your bank account. Suspect foul play if the consultant says that you should not contact the lender.