Minnesota Snowbirds ~ It's a Lifestyle Living in Arizona and spending the summers on Big Sandy Lake

Loan modification is a process that allows homeowners and lenders to change the terms of a loan in order to help the borrower stop foreclosure. A loan modification is NOT a new loan. It is the renegotiation - or loan restructuring - of an existing mortgage note. For homeowners behind on their mortgage, or those with a low credit score, a loan modification is often the only option available because they are unable to get approved for a mortgage refinance or a shortsale.

A loan modification can be done in several ways or combination of ways listed below:

• the loan's interest rate may be decreased
• the interest rate could be changed from an adjustable to a fixed rate
• the period of time the borrower has to pay the loan back can be lengthened
• the type of loan could be changed altogether

Many borrowers are facing foreclosure because their interest only or variable rate loan interest terms have sky rocketed beyond what they could have imagined. A loan restructuring is an agreeable way for both the lender and the borrower to avoid the cost and hassle of the foreclosure process.

                                      Free information about Loan Modifications

1. What is a loan Modification?

A loan modification is a permanent change in a loans terms, such as monthly payment, interest rate, to meet the currents borrowers situation. The loan is reinstated by the current lender at an affordable monthly payment the borrower can afford. Each situation is unique and is subject to lender approval.

2. Do I qualify for a loan modification?

Not everyone will be able to qualify for the loan modification process. Each and every individual has their own hardship situation that has caused them to need a loan modification, the lender takes into consideration the borrowers ability to repay the new loan back, its alot like refinancing your loan.

You will be asked to show them. Last 2 years W-2 forms or 1099's, if self-employed: your Profit and Loss statement, and last 2 years taxes,copy of your current mortgage statements, copy of foreclosure statement if applicable, other forms of income, current bills to date, you will also need to fill out a Authorization to release credit information.

3. What types of hardships are acceptable?

Each and every homeowner has their own unique situation that caused them to get behind on their mortgage payments, so in a nut shell anyone who can prove beyond a shadow of a doubt that they are having difficult times, usually can qualify for a mortgage modification. This is the last step a borrower can take before offering a home up for a short sale, after that it goes into the process shown above. Depending on what state you live in the process may be a little different across the country.

Hardships lenders consider are as follows, loss of income, divorce/separation, military hardship, death of spouse, illness. Lets make it easy to understand the harder the times a borrower is having the more likely the lender is going to grant a loan modification. Each and every lender is different.

4. What if I am not behind on my mortgage payments?

With the current economic conditions and the recent stimulus package that has gone out you might be able to now apply for a modification, if your able to prove a hardship is imminent. Normally in the past, a borrower had to be behind 3-4 months on their mortgage payments or in the middle of  foreclosure. Mortgage modifications are now getting easier to do, do not be mislead though they just do not hand them out to anyone, and it takes a lot of time and patients and the skills of a surgeon to negotiate with these corporations today to get a modification closed.

5. How much time does this take?

A loan modification can be completed in as little as 2 weeks but it may also take as long as 90-120 days depending on the lender and the circumstances, with as many as are getting done these days I hope the money continues to be there for the modifications.

6. What is the best option for me?

When you contact us we can help you out with that decision, there are several options and depending on your circumstances it might be the best solution for you. Other options include a reinstatement plan, refinance, repayment plan, short sale, deed in lieu of foreclosure, or maybe even bankruptcy.

Loan modifications are a good solution if you are unable to refinance your mortgage, you will have to be in a hardship and be able to prove it. Millions of Americans across the country have an adjustable rate mortgage and the rates have escalated to a outrageous interest rate, and they are unable to afford their payments, with property values going down all across the country we have options for you.

7. I am in foreclosure now! Is this an option for me, or is it too late?

The answer is yes!! The main goal of a loan modification is to avoid foreclosure, the lender does not want your property back, in fact on average across the nation it costs the lender $50,000.00 to take a property back. Buy working with the lender you and the bank make a new deal that hopefully will keep you in your home, and that is the goal of a modification. It is best if you start this process immediately and do not wait any longer.

8. How will this affect my credit rating with the credit agencies?

If you do not get a loan modification and you are behind on your payments they will report you to the credit agencies. If you apply for a modification and are granted one you get back on your feet and they report a positive rating. Just keep in mind your credit score is all you have these days and in these hard economic times keeping a good score is very important. Its your choice to take action now or to let your property go back to the lender. If that happens it is called an REO, Real Estate Owned by the lender.

9. Is this something a lender wants to do?

You may not realize that the lender does not want to foreclose on your home. They are in the business of lending money, not being property owners, it has a bad affect on them when they want to borrow money. From our experience most lenders are willing make modifications on a loan.

10. Can the lender require me to have an inspection?

Yes, the lender may require an inspection of the property, they will usually call a Real Estate professional to do a BPO (Broker Price Opinion) or a drive by inspection. In some cases they will have an appraiser come out and do a complete inspection. I have also seen lenders offer "cash for keys" in certain circumstances to get the people out of the house.

11. What happens to late payments and late fee's accrued?

Missed payments usually are put on the back side of the loan and are spread out over time to get caught back up. This will depend on the lender and what type of modification you are doing. I have seen some that were completely waived and they rewrote the loan completely. Each and every case is different. The main thing you want to do and request is a complete breakdown and description of all fees and penalties to do this modification

12. I have a cabin on Big Sandy Lake, in Mcgregor Minnesota or a vacation home in Phoenix Arizona, can you do a loan modification on a 2nd property or investment property?

Yes, however most lenders do not but some will do a loan modification on an investment property make sure you ask.