A loan modification can help a struggling homeowner who is unable to make his or her mortgage payment. They can be used to avoid foreclosure, short sales, and even refinances.
Qualifications and Benefits with Loan Modification
If you are considering a loan modification you’ll need to know if you qualify and how it will benefit you. Here are some reasons you should consider a loan modification:
1. You are experiencing hardship. A hardship is something unexpected that has made it difficult for you to afford your mortgage payment. This can be a job loss, sudden illness, or death in you immediate family. You will need to write a letter to your lender that outlines the hardship circumstances, as well as shows you are suffering financially difficulty because of the hardship. This “proof” can be in the form of pay stubs and bank statements.
2. You have negative equity. Having negative equity means you owe more on your house than it is worth.
3. You have a sub-prime loan. A sub-prime loan is a bad loan. This happened during the housing crisis. Many people were offered poor loan products to borrowers. These loans have a high rate of default and thus foreclosures.
4. You are facing foreclosure. If you are facing foreclosure you can request a loan modification that will keep you from foreclosing. You will need to explain how the modification will help you. Because lenders do not want you to foreclose, often times they will work out an arrangement to help you stay in your home.
Working with an Attorney
If you are facing foreclosure and need to know more about options that will allow you to stay in your home, you should contact an attorney. They might be able to help you avoid foreclosure, and even obtain a loan modification.
Source: Mortgage101.com, 4 Reasons to Consider Loan Modification, 2015