The news is unavoidable: More and more hardworking Americans are falling behind on their mortgage payments. In an effort to stabilize the real estate markets and to keep as many families in their homes as possible, the government, the banking industry, and homeowners have demanded alternatives to foreclosure. A loan modification is one type of foreclosure alternative.
What is loan modification?
Loan modification is a temporary or permanent change in the repayment terms of a home mortgage and can take a number of forms. Examples of loan modification include the following:
- Converting an adjustable-rate mortgage to a fixed-rate mortgage
- Extending the term of a loan from 30 years to 40 years
- Reducing the interest rate
- Financing overdue mortgage payments in an effort to bring the mortgage current
- Temporarily deferring payment of some or all of the principal
However, as the number of home foreclosures grows, companies that offer loan modification services have sprouted everywhere. Some are legitimate, but most providers of such services are nothing more than con artists who take money in exchange for empty promises.
Many home owners who have fallen behind on mortgage payments receive mail, telephone, and email solicitations from companies that offer—in exchange for a fee—to negotiate loan modifications and save their homes from foreclosure.
Here is what these companies don’t tell you: You can do exactly the same thing, FREE
You can talk to your lender yourself to discuss your options for a loan modification, and most lenders will NOT charge a fee to complete a loan modification. If you feel nervous about speaking with your lender or are unsure about how the loan-modification process works, don’t worry. The process is easier than you might think and can often be done over the phone.
This guide will give you a step-by-step method to apply for your own loan modification, a process that can save you thousands of dollars—and possibly your home.
Here are the steps that are covered:
- Step 1: Prepare yourself
- Step 2: Gather the necessary documents
- Step 3: Know what to expect
- Step 4: Contact your lender
- Step 5: Review your loan-modification plan
- Step 6: Finalize the approval and begin making payments
- Frequently asked questions about loan modification
Proceed to Step One
The information contained in this document is for informational purposes only and is not to be construed as or substituted for legal advice. The potential loss of one’s property is a serious issue. Recipients of this document hereby disclaim any liability against the author, Scott Tennell, Delray Credit Counseling, and its employees and officers.