Over the past few years, everybody seems to be talking about home loan modifications. In fact, Golden State Financial Group provides consultancy services specifically for these types of financial products. Most people know that a loan modification has been designed to help them keep their home, but that is about all they know about it.
Golden State Financial Group Explains the Home Loan Modification
In generic terms, this type of financial construction is precisely what the name suggests: a change to your home loan. If you own a home and you have an agreed mortgage but cannot refinance on it when you find yourself in difficulties, you may need a loan modification. This is essentially designed to help you avoid foreclosure, to make sure you can stay in your home, and to give you the time to get your budget right again. The way it works is by making a change to your existing agreement, stopping you form becoming delinquent (or more delinquent) on your payments and getting your affairs in order.
If you miss just two or three payments on your mortgage, then your lender has probably already started the process of foreclosure. You may not have been notified of this yet, but it is true. What this means is that, if you think you will miss a mortgage payment, you need to take action straight away.
Through a loan modification, you can change your loan’s rate, your loan’s balance, or any other of those factors. The interest rate of your mortgage is adjusted, thereby essentially giving you a fixed mortgage rate with a balance of payments. It is not a refinance, however, which means that you don’t have to pay for an appraisal, closing costs, surveys, or legal fees.
Not everybody qualifies for loan modification, however. Stringent rules have had to be put in place so that people don’t just simply stop paying their mortgage because they think they can modify the loan anyway. You have to be able to demonstrate that you are in real hardship, which can be because:
- You lost your income, or it was reduced.
- You lost your job.
- You have to relocate because of your job.
- An unnatural or natural disaster (fire or flood, for instance) caused damage to your property.
- Unpaid medical bills.
- Military active duty.
- Business failure.
- Death of spouse or co-borrower.
- Adjustable rate increase leading to payment shock.
At the end of the day, loan modifications are there to help people find a balance in a tough situation. It is important to understand, however, that it is not some sort of easy way out. You will have to negotiate with your lender, something best done through a professional like Golden State Financial Group, and you must be committed to making your new payments on time, every time. If not, you can guarantee that your lender will foreclose on your property very quickly, not in the least because they are likely to have already started those procedures anyway.