Home Loan Modification versus Foreclosures

Homeowners that are looking for a way to avoid foreclosure will often turn to loan modification to bail them out. A loan modification usually happens when the current loan terms are changed with the lender of a current mortgage. By changing your loan terms, you can lower your monthly payment without refinancing your mortgage and avoid foreclosure on your home. Here is an overview of home loan modification versus foreclosures.

Qualifying for Loan Modification

In order to qualify for a loan modification program, you will need to show financial hardship, such as loss of income, death in the family, illness and so on. A letter explaining your hardship, proof of income and the reason for defaulting on the loan will be required to qualify for a loan modification.

Avoid Foreclosure with a Loan Modification Program

If you are a homeowner who is at-risk of losing your home and want to avoid foreclosure, loan modification is the way to go. By changing your loan terms,you can reduces your monthly mortgage payments, and save your home. Fanny May and Freddie Mac have loan modification programs that are specifically designed for homeowners who are at-risk of losing their home. The home loan modification programs stop foreclosure from taking place.

Types of Loan Modification Programs

There are several types of loan modification programs available including:

• Interest Rate Modification
• Loan Term Modification
• Principal Balance Reduction Modification

Overview of Foreclosure

When a borrower defaults on a mortgage, the lender can foreclose on the loan and reposes the property. Foreclosure is a process by which a mortgage lender takes the proper statutory procedures to obtain a termination on a loan. The lender can also collect on other debts that are associated with the loan, such as overdue assessments, taxes, and homeowners’ association fees as well as any unpaid contractor’s bills.

Tips to Avoid Foreclosure

Foreclosure can be avoided if you stay in contact with your lender. If you are suffering from financial hardship due to an increase in your monthly mortgage payment, job loss, illness, divorce, or other reasons, contact your lender immediately to see if you qualify for a reduction in rates or other mortgage programs. Here are some other things that you can do to avoid foreclosure:

• Do not ignore the problem
• Know your mortgage rights
• Learn about foreclosure prevention programs
• Contact a loan modification specialist
• Work on reinstating the loan
• Don’t fall for foreclosure scams

Home Loan Modification versus Foreclosures: Which one will you choose?

If you are interested in a home loan modification program, contact a loan modification specialist for a free consultation to see if you qualify and avoid foreclosure on your home.