Loan Modification-A Finalcila Relife?

Modifying your loan can help you retain your home. The existing economic shortfall has taken a toll on all sectors of the economy. The consumers are the worst affected. With increasing mortgage defaults and consequent foreclosures, more and more borrowers are resorting to loan modification.

When you modify a loan, you actually alter or change the existing terms and conditions of your loan. It is like paying off your mortgage loan without refinancing and simultaneously you save your property too.

Make a loan modification request If you are planning to modify the terms of your loan, make a request to the lender. However, the ultimate decision lies with the lender, if he will agree to modify your loan or not. Once your application is considered, the lenders will start the loan modification procedure. They will inform you that your request has been granted and that you can avail loan modification. For the new terms and conditions to take effect, it takes a couple of weeks. A lender may refuse to keep your request if he finds that you have defaulted too frequently and giving you another chance may not be enough for you.

Your lender will take a note of your loan account. You have been making your mortgage payments as per the interest rate that was fixed by the lender. Your loan term as well as your principal balance will be taken into consideration. Mostly, lenders reduce the rate of interest or your loan tenure is increased.

It has also been reported that there were a couple of lenders who allowed borrowers to change their interest rate from FRM (fixed-rate mortgage) to ARM (adjustable-rate mortgage).

How much does loan modification cost? Loan modification helps homeowners to save a lot. It not only protects the borrower’s credit rating but also stops foreclosure. It makes the value of the property stable and prevents a distressed sale. The loan modification services offered by lenders differ from one another. The cost of modifying loans may range between USD$895 and USD$8,000.

There are a couple of companies offering just consultation services. In such cases, prices are less and may range between USD$399 and USD$1,495. So, depending on the services you are availing, loan modification costs are determined.