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Oct 12

Qualify and Benefit from Mortgage Modifications

This blog about mortgage modification is a continuation of our series on important terms used in the mortgage industry. Mortgage modification, also known as loan modification can be extremely helpful for homeowners who are suffering from financial setbacks and are unable to manage payments at their current rates.

Loan Modification AttorneyMortgage modification is different from mortgage refinancing in many ways. You do not need to payout your previous loan in order to get new rates, and your final debt is not affected.

Through a loan modification, your interest rates can be lowered along with your monthly mortgage payments. The monthly payments can be lowered to as low as 31% of your gross monthly income and the interest rates can be lowered to about 2% in some cases.

The Home Affordable Modification Program (HAMP) introduced by the government is for  homeowners who are struggling financially and simply cannot afford to make their monthly payments at current rates. The program can be used to help avoid foreclosures.

The foreclosure defense attorneys at Amerihope Alliance Legal Services strongly recommend you make sure you qualify for mortgage modifications before applying through HAMP. Following are some of the major qualifications:

  1.  The property must be your primary residence.
  2. You must sign a financial hardship program.
  3. You must provide documented proof of your income along with information about your tax payment.
  4. For people with debts more than 55% of their total income, debt counseling is mandatory.

It is important to understand that lenders are not forced by law to give you a loan modification. However, it is beneficial for them if you continue with your payments even if at a lower rate. Lenders who approve loan modifications are provided special benefits and incentives by the government under HAMP.

Loan modification attorneys also advise homeowners to never miss out on their modified mortgage payments and to never go into default. The lending institution would go for foreclosure if that is more financially beneficial to it, don’t give it that option.  Most mortgage lenders will not review  a file for a loan modification unless the homeowner is in default, which creates a very sticky situation for homeowners.

Another important tip from the loan modification attorneys is that if you have filed for bankruptcy, you can still get a loan modification. Also, people who get unemployment benefits can qualify for loan modification.

There are more loan modification programs than just HAMP. Many mortgage lenders have loan modification programs that are not publicized, and certainly not advertised.

If you the monthly payments and interest rates on your mortgage are too high, and you are struggling to make ends meet, you should immediately get a free consultation. For more information visit our blog, contact us at 877-882-5338.

You can also download our Hardship Letter Writing Guide to help you get started.

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