Loan Modification Frequently Asked Questions

Q: What is a Loan Modification?
A: A Loan Modification is when the bank allows a change in the terms of your existing mortgage. The purpose of a modification is to significantly lower your monthly payments, for either a temporary or permanent period of time.

Q: Who qualifies for a loan modification?
A: Anyone that is having trouble paying their existing loan may qualify for a loan modification. In today’s housing market banks are willing to work with mortgage holders who are having trouble paying their mortgage. However, homeowners with a high probability of getting a loan modification are those currently in an adjustable rate mortgage, who have a high interest rate, and/or are experiencing any kind of hardship.

Q: Why will it work for me?
A: The government has asked for ALL lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. Going to your lender with the representation of a mortgage specialist, will make a scary process seem simple.

Q: What if my credit is bad?
A: A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan. The loan modification will not hurt your credit; generally only late payments or a foreclosure will negatively affect your credit score.

Q: What if I have no equity or I am upside on my home?
A: It does not matter! Some banks are doing a principal reduction, which means the bank will discount the total loan amount to the current value of your home or close. Most banks or lenders rarely do this.

Q: What if my income is too low?
A: You will need to show the bank that you and all others in your household together can afford the new payment.

Q: What should I expect the terms to be on my new loan?
A: Banks are rapidly changing guidelines for Loan Modifications. A bank will typically modify your loan into a loan you can afford and continue to pay. This may include a lower interest rate, payment reschedule, principal reduction, longer terms or any other modification that will make and keep the loan a “performing loan‟.

Q: How much can I save by doing a loan modification?
A: You can save hundreds or even thousands a month, depending on your loan amount. Remember, a loan is typically for 30 years. So the Loan Modification that saves you $500 a month really equals $150,000 over the life of the loan.

Q: Does every bank do loan modifications?
A: Most all banks do some form of a loan modification today. We are in a housing crisis and most banks are willing to work with clients to help them save their homes.

Q: How do the government programs affect my chances of getting a loan modification?
A: The government is telling banks they need to do their part to fix the housing crisis. The Bail-Out Bill, Obama’s Home Affordable Modification Program (HAMP) or Making Home Affordable (MHA), and other plans will only improve your chances of getting a Loan Modification. The government is now offering incentives to banks and officers, and even homeowners, depending on certain criteria.

Q: How long does the process take?
A: Every bank is different, but it typically takes 30-90 days or more to get settle on a loan modification agreement.

Q: Are there any other costs involved? Appraisal, credit report, title, closing costs, broker fees, etc.
A: There are No other costs associated with a Loan Modification. The banks are modifying loans for no charge. They may sometime ask for a trial period, which demonstrates that you are serious about staying in your home. For all other questions please call us at 239-645-6349