| Answers to Your Mortgage Loan Modification Questions |
Homeowners who are struggling to pay their mortgages are wondering what options they have other than foreclosure. One avenue for relief is a mortgage loan modification.
A mortgage loan modification means the terms of a loan are adjusted. Lenders decide how this is done and their decisions are made on an individual basis. It is important that you are very careful when you are negotiating these changes and you will benefit from a licensed financial counselor's advice. Make sure you get a deal that will really help you. If you change the terms of your loan but you are still expected to pay the same amount each month, you will be in the same situation after modification as you were before.
In the past it was very difficult to get a loan modification and there was no uniform, predictable process. The Obama administration passed the Making Home Affordable Act and made it effective December 31, 2012. Homeowners who are finding it hard to make mortgage payments that are more than 31% of their income are eligible for home loan modifications.
Naturally, there are some added criteria in order to be eligible for this plan. You must live in the home for which the mortgage is being modified. Your loan must have been negotiated and signed before 2009 and Freddie Mac or Fannie Mae must insure the loan.
There are many benefits to being approved for a loan modification through the Making Home Affordable Plan. Part of the plan is a Homeowner Stability Initiative, which has earmarked $75 billion in order to motivate lenders to offer modification and to motivate homeowners to pay their modified mortgages on time. Lenders get payments if they negotiate a successful modification and collect the payments. Homeowners get incentive payments if they make their payments on time, which are applied to their principal.
There are many ways to go about obtaining a loan modification but none of them work as well as going through the Making Home Affordable plan. This plan has clear, consistent procedures outlined which lenders follow when modifying a mortgage loan. First they reduce the interest rate, then, if they need to, they extend the length of the loan. Forbearance of principal is the last option. It is very easy to understand.
In order to qualify for a mortgage loan modification, you will need to contact a financial counselor and discuss the process with them. You must write a hardship letter to your lender, which outlines the reason for your request and you will also have to submit paperwork to prove your financial situation and income.
Mortgage loan modifications are not new, but President Obama's plan for modifying loans has totally changed the process. This plan makes it possible to prevent foreclosure and to stay in your home.
For essential tips and facts about how to get approved for a Loan Modification, Visit our simple, no nonsense loan modification guide and resource: http://MortgageModificationLoan.net/
Article Source: UnArchived Articles
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