Loan modifications have become very popular recently due to the increase in nationwide foreclosures which happen to be blamed by many in part on adjustable rate home loans and unemployment. Adjustable rate mortgages traditionally offered homeowners a low fixed rate and payment for a short period of time then adjusted which in many instances leads to a homeowner's mortgage payment to dramatically increase.
One ought to know that a loan modification is not automatically granted through the lender simply because he/she asked for one. The lender thinking about the modification does review a full application submitted by the borrower before creating a determination. If you are seeking a loan modification, there are numerous of factors that the lender considers before deciding upon whether to grant or deny your modification request.
In most instances, the lender examines the borrowers income which demonstrates a chance to make the payments on the new modified terms. The lender also examines the realistic benefit of the modification compared to the current loan terms. It is not likely that a modification request will get approved when there is a marginal difference from the loan that you curently have. If approved, a loan modification can alleviate the financial burden the result of a high mortgage payment and can also increase a your disposable cashflow which may be used to address other monthly debt.
Understanding Your Type of Home loan
Before requesting your loan modification, you should first be sure you have a working understand of your exact type of home loan. Having a working understanding of your mortgage loan will definitely help frame your modification request. You should first get hold of your mortgage contract which is otherwise called a home loan "note".
What type of mortgage "note" do you possess? Is it a fixed rate, adjustable or variable price, interest only, interest only for 10 years, option EQUIP, fixed rate with a balloon due at the finish?
If you haven't done so already, you should visit a very important document called a "note", which is probably located with the stack of papers you received whenever you last closed on your loan. Now depending on which kind of mortgage you have, your "note" will describe exactly what type of a loan you have.
If you have an flexible rate mortgage, your note would be titled "Adjustable Note". For those who have a fixed rate mortgage, your note will be titled "Fixed Rate Note" or just "Mortgage Note". Likewise if you have a balloon mortgage and hopefully you know should you choose, your note will be titled "Balloon Note". And incidentally, a balloon mortgage is not a loan that has a set of balloons after you close.
What is an email? A note or "promissory note" is simply the contract that spells out your written promise to pay for back the loan. Promissory notes are not only issued on home loans, but also on car loans, personal loans and any kind of loan where there is the expectation of regular monthly obligations or installments to satisfy that loan debt.
A mortgage note is generally about 5 pages long and the language is divided into numbered paragraphs, which each contain specific information concerning the loan. The note will identify the borrower, address from the property financed, the interest rate, amount of the payment and loan amount. After reading your note you should have a far greater understanding of your exact loan type to request the assist you to seek from you lender.
How Do I Qualify For any Loan Modification?
When requesting a loan modification from a person lender, you should be very specific about what you are searching for and why you should get it. As mentioned over, having an understanding of your current mortgage type can help greatly. You should absolutely make your modification request on paper and not accept any final determination from the lender verbally or higher the phone.
You may be surprised to hear that there's no specific criteria of eligibility. Income however is certainly critical. The Government's loan assistance program coined the Obama Modification and Refinance Program has introduced some confusion in regards to a borrowers qualification, so it is best to address your own lender directly.
Do I Need an Attorney to Alter My Loan?
You absolutely do not require an attorney to request financing modification. In fact you lender would prefer that you do not have one. Your lender is the only party that may voluntarily modify your loan. An attorney can send a modification request to your lender exactly like you can, except the attorney will charge you a fortune for doing so.
The lender does not shake once they see a modification request prepared by an attorney and several law firms or "loan modification companies" market their services being an assured bridge between you and a much lower repayment. The lender is not going to say "let's settle this one" such as the old Jacoby & Meyers commercials that dramatized the moment the insurance provider receives a demand letter from the world renown lawyer. You lender will honor a sensible request prepared through you, their customer, as long as it is created, well thought out, and demonstrates good faith on your own part.