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How Does Mortgage Loan Modification Work for Homeowners?

  • Jill
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  • July 30, 2018

How Does Mortgage Loan Modification Work for Homeowners?

mortgage loan modification

Q: How Does Mortgage Loan Modification Work for Homeowners?

A: The goal for so many of us is to one day be a homeowner. It can be a struggle to get there, but it feels great once you do. You’ve gone through all the steps; you’ve checked your finances, and you’ve used many free mortgage calculators online. However, life sometimes happens. And if, for whatever reason, you fall behind on your mortgage payments, you may find yourself in the unfortunate situation of the bank foreclosing on your house. When that happens, it’s possible you might be eligible for a mortgage loan modification.

Q: What Is A Mortgage Loan Modification?

A: If you find that your bank is foreclosing on your house, it’s possible you’ll be able to get a mortgage loan modification. A mortgage loan modification is a process where the terms of a mortgage are adjusted from the original terms of the mortgage contract that was agreed to by the lender and borrower. These are separate from refinancing. The refinancing process involves replacing a loan with a completely separate mortgage.

Q: How Does It Work?

A: If you’re able to acquire a mortgage loan modification, the bank may convert from a variable interest rate to a fixed interest rate, extend the term of your loan, and/or reduce your interest rate. If you’re in a situation where you’re facing foreclosure, these modifications may be your best bet in keeping your home.

Q: How Do You Get a Mortgage Loan Modification?

A: If you’re interested in getting a mortgage loan modification, an attorney can provide very useful assistance with collection of documents and communication with the lender.  Otherwise, you’ll need to be extremely diligent. You’ll need to prove that you’re experiencing a financial hardship. A borrower must also submit paycheck stubs, a budget, and whatever else the bank may request. You’ll need to make sure that you’re in contact with the bank and re-reviewing all the documents. You may have to re-submit documents, but that’s a very common part of this particular process. You may also have to complete a trial period with the new amount in order for the mortgage loan modification to be completed.

Q: What Are The Different Types of Mortgage Loan Modifications?

A: There are some banks that offer their own loan modification programs. These can be either temporary or permanent. Some lenders will allow some to refinance to a lower rate even without a hardship. However, if you’re unable to refinance, you may be able to change your mortgage rates via the federal government. While the Home Affordable Modification Program expired in 2016, there is a new foreclosure-prevention program called the Flex Modification Program. This is mainly available for those with mortgages affiliated with Fannie Mae and Freddie Mac. Additionally, the Home Affordable Refinance Program, or HARP, is available until December 31, 2018.

Q: Why Shouldn’t You Get A Mortgage Loan Modification?

A: While a loan modification can be very helpful in certain circumstances, there are some potential downsides. For instance, it’s possible you’ll see a negative impact on your credit score. While not as bad as a foreclosure, it could be difficult to get out from under. Additionally, if your mortgage is given additional length, it may mean that you’re in debt even longer. However, while those hardships may make it difficult down the line, it may be your best bet depending on your situation.

Q: Why Choose Bartifay Law Offices?

A: If you live in the Pennsylvania area, call Bartifay Law Offices, P.C. today at 412-824-4011. Our law offices help people form a dynamic financial plan for your future. Contact us today for a consultation regarding mortgage foreclosure defense, bankruptcy, and mortgage loan modification representation.