Article Treasure Cove

The thought of having your home move into foreclosure is a scary prospect and you want to do all you can to stop foreclosure. You not only lose your house in a foreclosure but also your security and dignity. Also your credit score declines drastically. This can make it hard to find a job, when renting a house or you want to get approved for a car loan along with several other day to day activities. Getting a new mortgage is completely out of the question for at least 5 years.

So what can you do if you are facing this predicament? How can you protect yourself and your family from losing you house? What can you do to avoid foreclosure?

There is one answer that stands out from the rest: A Loan Modification, which is sometimes referred to as a Mortgage Modification. What follows is a explanation of what a Loan Modification is and how it can assist you to avoid foreclosure.

What is a Loan Modification?
A mortgage modification is simply a legal negotiation that takes place between the mortgage company and a home owner’s representative. During these negotiations an agreement is made to alter the loan’s terms, such as the interest rate, monthly mortgage payment or the length of the loan. The result is a reduced monthly payments that are more conducive to the homeowner’s present economic condition.

What would make a bank to be agreeable to adjusting my loan in my favor?
Foreclosing on a house is an expensive process for mortgage companies. They have tons of paper work they have to pay someone to do, they usually sell the house below its worth and they do not make any money from the interest in the years to come. Simply put it is much more cost effective for lenders to negotiate than it is to foreclose. It is truly a win/win proposition.

What is it that bankers change to make my payments more manageable?
Basically there are 4 possible adjustments a banker can make to a home owner’s present loan:

Reduce interest rates – The banker agrees to lower your interest rate thus lowering your mortgage payments. This frequently happens when your loan is an adjustable rate mortgage (ARM) and the interest rate has jumped considerably.

Reduced monthly mortgage payments – This is straight forward; the mortgage company agrees to lower your payments, however you will still pay the entire loan. This is often temporary, for a a few years.

Reduce the principal owed – There are times when a regions’ real estate market slumps so badly that a home is worth less than what is still owed. In this instance the banker may lower the total value of the loan.

Add time to the loan – This may seem like refinancing however it is different since you do not have to qualify, there are no closing costs, etc. In this scenario the lender extends the time left on your loan giving you more time to pay back the same amount of money.

All of these adjustments are designed to lower your monthly mortgage payment so that you can still afford your home. You could possibly get more than a single adjustment however it is not very common.

The best of these solutions is the lower interest rate. Not only does it reduce your monthly payments but also reduces the amount you will pay over time. For those of you who are looking for a mortgage modification you should check out Loan-Modification-Masters.com and apply for a free evaluation.

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