What Is a Loan Modification?
A loan modification is a good solution for those who want to stay in the home.
What is a Loan Modification?
A Loan Modification is a negotiation between a lender and a borrower whereas the loan terms are restructured without refinancing. The rate and terms of the loan are restructured to fit the current financial situation of the borrower.
Banks and lenders would rather take less money and keep homeowners in their home making a payment that they can afford, rather than go through the expense of foreclosing on the home, hiring a listing agent, rehabilitating the home, and letting it sit empty on the market for months, only to lose thousands in the process.
A loan modification is a good solution for those who cannot refinance, are behind on payments or struggling to make the payments, have experienced a genuine hardship, and want to stay in the home. A loan modification is a permanent solution and is not meant to be used as a temporary stop to the foreclosure process.
Should I hire a professional to negotiate a loan modification?
There are several advantages of hiring a professional but you must also be very careful if you choose to use a loan modification company that takes a fee up front to negotiate your loan modification for you. It can end up costing you another month's mortgage payment in exchange for false hope. No one can ever guarantee a successful modification, so NEVER spend any money with any company unless they can guarantee your money back if they're not successful with the modification.
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