Receiving A Loan Modification Vs. Re-Writing Your Home Loan

Most individuals think that re-writing your loan is a good resolution when they are trying to halt a sheriff's sale. This is sometimes a smart idea; if you have equity in your real estate and if you re-write your loan before your credit score is destroyed from the delinquent payments. The problem is that most consumers don't fall into this category. Most foreclosure victims have terrible credit and no value built up. This means that a large percentage of home owners who are facing legal action are wasting valuable time trying refinance their loan.

A smarter way to go is a mortgage modification with your existing lender. A mortgage modification is when the terms of your existing debt are modified to produce a decreased monthly installment. In essence, it's similar to a refinance, but your credit and equity are not a major determining factor, like a refinance. Most of the time, the interest rate is lowered and the time of the mortgage is re-figured to a 30-year fixed rate. It is possible that the principal mortgage amount is even lowered to reach the affordable monthly installment figure.

It may be that by simply asking your banker for a loan modification will work. But more often than not, your best option would be to hire a professional negotiator to work on your behalf. When you contact a professional, make sure you don't pay money up front; or if you do, make sure it is deposited into an escrow account until the case is complete. If you don't get results, you should not have to pay for their attempt to help you! Do your research and be careful not to get scammed. New laws are on the books to cover homeowners, but criminals will always be there to steal your money if you let them.

When talking with your lender, you will have to complete a loss mitigation package when seeking your mortgage modification. This will help them research your qualifications. This is where a professional will come in handy, since being denied can be irreversible. It's important to submit a package that is complete and can be approved the initially. You may be asked to provide proof of income, as you did when you obtained the original loan. Whether or not your income has fluctuated is one of the things that the banks will be watching.

If the appraisal of your home has decreased and you are "upside down" in your mortgage, then you need to decide if keeping your real estate is even the smartest move. As a reminder, you may qualify for a loan, mortgage modification with a principal reduction, but unloading the real estate may be a better choice. When you are upside down in your mortgage, a short sale can be a good option. A short sale is when the real estate is sold for less than the payoff amount and the lenderforgives the rest of the loan.

Short sales can be difficult, because your servicer will move slowly to this solution and may file a deficiency judgment after the property sells. It's vital to get your short sale agreement in writing and to make sure they waive their right to pursue this deficiency judgment at a later date. We never recommend consumers attempting a short sale on their own. Professional short sale negotiators are available at no charge (to the homeowner), so take advantage and make sure your rights are protected.

When it is all said and done, it's important to know that you have options and letting your real estate go to foreclosure is never a good idea. Your credit will be ruined for years to come and buying a new house will be virtually impossible until you have recovered. Don't be afraid to ask for help or seek a professional to assist you through these difficult circumstances. Your lender uses professionals, you should have the same advantage!

Article Source: http://www.109b.com/artdash

Homeowners interested in loan modification, foreclosure loans, deed in lieu, and other solutions to delay foreclosure can find all the resources they need by visiting Nick's ForeclosureFish website. Visit the site while you still have time to figure out a solution to save your house before the mortgage company has it sold out from under you at a county government public auction. Hundreds of pages of information, solutions, and general advice can be researched at the website, which can be located here: www.foreclosurefish.com/

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