Crash Course On Mortgage Loan Modification
Having trouble with yoru housing loan? When this happens
, it is common for people to think that they might lose their home to their loan providers. Before you stress yourself out thinking about this possibility, consider mortgage loan modification. What this program does is basically modifying your loan so that the terms are reinstated to fit your financial situation. You just need to get yourself familiar with the software and you can start using it to your advantage.
What is a mortgage loan modification anyway? What does it do? It just basically adjust your loan terms and make it more affordable for you. This means that you don't need to apply for a re-loan, instead, you just need to modify your loan. Both you and the loan provider will find this process more convenient for you.
Now, who will be eligible for this program? Only those who applied their loans before January 1, 2010 are eligible for this program. Eligibility for a mortgage loan modification has two classifications. One is for people with updated mortgage payments and the other is for those who have missed payments but have paid at least 31% of their total mortgage.
The government of course wil be in the middle since it's a mortgage loan modification. Basing on the modification program, the government subsidizes the cost which results to the drop in payments to a rate of 31%. Loan modification to fit the mortgagee's financial ability can be done in a number of ways. Terms of the mortgage can be extended up to 40 years, another type of loan may be offered to the mortgagee or the interest rate can be reduced or the combination of these three options. Banks and other loan providers are also encouraged by the government to participate in the program, aside of course from the subsidies provided.
However, there's a difference between a loan modification agreement and a forbearance agreement. The former is a temporary solution offered to mortgagees who are undergoing financial difficulties which are expected to be short-lived while the latter is a long-term program for those who are completely unable to pay off an existing loan.
by: Henry Watts
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