Sinking in debt?

Are you feeling like your mortgage is sinking underwater? Many Americans do. Suddenly faced with little to no equity due to shifts in local real estate values and an inability to pay the monthly bill because of a loss of employment, many homeowners wonder what they can do to keep their homes. One option to consider is a loan modification.

What Is loan modification?

It is a process to avoid foreclosure on your home. Modifications offered by lenders make your mortgage affordable by reducing the amount due each month. This is done by either reducing the loan’s interest rate, lowering the amount of principal due or extending the length of the loan payback period.

Are there eligibility requirements?

Yes. For example, the federal government’s Home Affordable Modification Program (HAMP) has eligibility requirements for homeowners that have a change in circumstances that make it difficult for them to pay their full mortgage bill. The program application is like many other financial applications and requires documentation of your financial situation.

Why is there a trial period for a modification program?

The trial period for the program is a temporary arrangement that runs for a matter of months while your application is under consideration. The trial is meant to give you immediate relief while the lender evaluates all of the details of your application. It is crucial for you to pay your modified mortgage bill on time each month of the trial period.

Is it important to get legal advice about a loan modification, and are there any alternatives if I don’t qualify for a modification?

A loan modification involves the security of your home and a large monetary commitment, so it is a good idea to involve legal counsel in the process if your home is at stake. If you don’t qualify for a modification, your attorney can explore other options with you.

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