Nowadays a lot of homeowners are searching for some respite from the hardship of predatory lending practices. With many people seeking assistance, at times straightforward answers can be challenging to locate, even to easy questions. One piece of information that many individuals seem uninformed of is that modifying your loan will not ruin your credit rating. By comparison, foreclosing on your mortgage will put an end to your chances of getting another mortgage forever. The blight on your credit rating caused by foreclosure will hurt you forever that is why people are rightly scared of foreclosure.
Simply extending the life of the loan is the simplest method of loan modification. For example, instead of paying 1000 dollars each month for 30 years, you can pay 500 dollars each month for 40 years. The time of the mortgage is extended, but the monthly payments get reduced greatly. This is of course the easiest way to explain how loan modification works, but the process can be more complicated. The interest rate can also be adjusted, which lowers the monthly payments without necessarily changing the length of the mortgage. And of course it is possible to both extend the term and reduce the interest rate, a double win for the home owner!
The first step in the loan modification process is to get the application forms and then gather all of your financial information-like paycheck stubs, bank statements, etc. You will need these to complete the forms correctly. Your bank needs to get a clear picture of your current financial situation-this is done by providing a detailed accounting of your income, expenses and assets each month. Based on this information, your bank will decide if you fit into their guidelines for a loan modification or loan workout.
You must also write a letter describing why you need a loan workout. This is usually due to some type of financial hardship, generally loss of income or increased expenses. Again, the loss mitigators want you to be accurate and brief. No need to write a novel, but a descriptive and factual telling of your circumstances will do the trick.
The Making Home Affordable Plan also gives lenders a clear and consistent procedure to follow when modifying home loans: First they lower your interest rate, secondly they extend the life of the loan if necessary, and then lastly they forbear principal on the loan. These three procedures should be able to help all homeowners in need.
Simply extending the life of the loan is the simplest method of loan modification. For example, instead of paying 1000 dollars each month for 30 years, you can pay 500 dollars each month for 40 years. The time of the mortgage is extended, but the monthly payments get reduced greatly. This is of course the easiest way to explain how loan modification works, but the process can be more complicated. The interest rate can also be adjusted, which lowers the monthly payments without necessarily changing the length of the mortgage. And of course it is possible to both extend the term and reduce the interest rate, a double win for the home owner!
The first step in the loan modification process is to get the application forms and then gather all of your financial information-like paycheck stubs, bank statements, etc. You will need these to complete the forms correctly. Your bank needs to get a clear picture of your current financial situation-this is done by providing a detailed accounting of your income, expenses and assets each month. Based on this information, your bank will decide if you fit into their guidelines for a loan modification or loan workout.
You must also write a letter describing why you need a loan workout. This is usually due to some type of financial hardship, generally loss of income or increased expenses. Again, the loss mitigators want you to be accurate and brief. No need to write a novel, but a descriptive and factual telling of your circumstances will do the trick.
The Making Home Affordable Plan also gives lenders a clear and consistent procedure to follow when modifying home loans: First they lower your interest rate, secondly they extend the life of the loan if necessary, and then lastly they forbear principal on the loan. These three procedures should be able to help all homeowners in need.
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