THE TRUTH ABOUT LOAN MODS

Just because you want a Loan Modification, doesn't mean you will QUALIFY for one. Here is the truth, no one seems to want to hear it, but here it is:

YOU STILL HAVE TO HAVE AN INCOME THAT SUPPORTS AND QUALIFIES YOU FOR THE LOAN!

The loan modification has to work for the lender, too. Why on earth would any bank make a bad loan now, especially now? If you have lost your job, and have no way to repay the loan, modified or not, why would the bank want to take on that risk?

The few loan modifications that I have seen approved, have involved adding any missed payments and fees to the remaining principle of the loan, lowering the interest rate, and lengthening the term of the loan (usually to a 40 year amortized loan). This type of a modification will lower your payment, but the house is still, more likely than not, worth less than you owe.

If you feel this is unfair, that you have heard on the TV, radio, and read in the newspaper and online that the government is helping people stay in their homes, and you are not one of them, you must be realistic. A bank must minimize risk, especially now in times where so many homeowners are in over their head with a mortgage that exceeds the value of the house.

Your alternative may be to simply sell the house and move on. Do some research on Short Sales and see if this is an option for you. But don't wait too long. If you have missed several payments on your mortgage and other debt, you may not be able to find a rental. Act early! If you let the bank foreclose on the property, that can affect your credit negatively for the next decade! If you have only missed a payment or two, DO SOMETHING NOW!!! The longer you wait the harder and more expensive it will be to the effects on your credit score.


For more information on Short Sales and Loan Modifications, contact me.