How Home Loan Modification Can Fix Your Mortgage Problems

How Home Loan Modification Can Fix Your Mortgage Problems post image

As a homeowner, you value your house not just a physical dwelling for you and your family, but also as a place where you share fond memories with your loved ones. Your home is an investment for the future, that’s why you want to make it as beautiful, livable and functional as possible.

For most people, buying their own homes with cold hard cash is simply out of the question, so they turn to home loans in order to purchase a place to live in. However, with the most recent financial crisis still fresh on everyone’s minds, applying for a loan is harder than ever. Banks and financial institutions do not want to make the same mistake they did a couple of years ago, which was to lend money to just about anyone who asked for it.

Stricter credit accommodation policies and higher interest rates are good when viewed from the lending institution’s perspective, but these are bad news for homeowners who only want to have their own house. The economic situation is not very welcoming of new lenders, and even those who have obtained their mortgages before the crash are finding it harder and harder to meet their monthly obligations and pay on time.

With more stringent housing loan programs and the bleak economy in the background, homeowners are up against the wall trying to make their housing dreams a reality.

Tough Times

For those homeowners are experiencing difficulties making their monthly installments, the possibility of losing the very same property they worked hard to maintain and pay for is terrifying indeed. It all boils down to whether or not you can keep paying your monthly dues, and if you cannot, the bank is likely to foreclose on your property soon.

However, you need not look for an alternative address just yet. Financial institutions understand what it’s like to be traveling on rough seas—they haven’t exactly had a grand time themselves since 2008—and there are now different options for homeowners to restructure their mortgages and make it easier for them to pay off their loans. A home loan modification is the easiest and smartest way for you to ensure that you can keep your property and still make good on your monthly payments.

A home loan modification program has several advantages which are:

  1. Extend the life of your mortgage so you get lower monthly rates
  2. Reduce your monthly installments to a more manageable sum
  3. Lower your fixed interest rate.
  4. Switch your loan from an adjustable interest rate to a fixed one
  5. Get a reduction on your principal.
  6. Stop the possibility of foreclosure and allow you to keep your home.

One thing you should remember about debt restructuring is that anyone can apply for it, but it is still up to the banks to evaluate whether or not you are a good candidate for their home loan modification program.

They want to help you clear off you mortgage or at least reduce the payment terms to a more manageable level, but they also want to make sure that you will be able to keep your end of the bargain. It’s designed to be a win-win solution, but for it to work, both parties have to be absolutely up front and honest with their dealings.

How To Apply For A Home Loan Modification

As a homeowner, you have the prerogative of applying for a home modification loan by first sending a hardship letter to the creditor bank or lender. Call your bank or lending institution to inquire about the documents required for the home loan modification. Some financial institutions will also require that you must be late in making your payments before you become eligible for loan modification, but this is not an absolute necessity.

If you anticipate a significant reduction in your financial resources in the near future and can honestly say that you will have serious difficulties meeting your monthly obligations, then by all means write that letter and ask if you can be allowed to restructure your loan. Some hardship situations include grave health problems, education expenses, divorce proceedings or loss of job.

However, you will have to prove that you are not on the brink of bankruptcy, because otherwise it is just easier as well as smarter for the bank to foreclose on your property and sell it off to get their money back.

Give a frank and honest disclosure of your financial situation so that the bank can evaluate your loan effectively and make a fair and informed decision on your application. If you think you cannot write an effective and convincing hardship letter, you can seek professional help to increase your chances of approval.

Ally is part of the team that manages Australian Credit Cards, a free balance transfer credit cards comparison service in Australia. You can follow ACC on Twitter if you like to stay updated on their latest contents. Before joining ACC, Ally was a Media Planner with McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi’s 501 “Live Unbuttoned” global campaign.

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