Loan Modifications FAQs.
There is a lot of talk these days of something called loan modification. You may have been getting mail several times a week offering it. So I am going to go over what it is and who it is for.
What is a loan modification?
A loan modification is a way to renegotiate the terms of your current mortgage. It is a bit like a refinance but without some of the drawbacks. Right now the main drawback is appraisals. Currently a lot of people owe more on their home than it is worth, and that makes for a near impossible refinance. These are a very important tool to help keep homeowners in their home.
Who is a loan modification for?
The easy answer is anyone who is currently behind or at risk of being behind on their mortgage.
What does a loan modification cost?
Here is a great question. Because the range of fees is so great, I am going to touch on a few points. I have seen programs where they are charging up to $4000 upfront. But the normal fees seem to be somewhere in the $2500-$3500 range.
Will a loan modification hurt my credit?
Let's answer a more obivious question first. Is it more important for you to keep your home or keep your credit good? Best case would be both, but some lenders will report you late when you are in your trial period. Although it may not hurt your credit, it is probably safer to say that you will get marked late, but that is a good tradeoff for getting a permanent payment that you can afford.
Do I need to be late to qualify?
Absolutely not! Do not ruin your credit by being late. I know this sounds a little backwards from the FAQ above, but sometimes we can get you a refinance and if you are late on your mortgage, we will not be able to. The correct order to fixing your mortgage is refinance, modification then possible sell if the first two don't work.
Is it a scam?
As a general rule I am going to say no. But here is the concern. If you are paying someone $4000 upfront, what is to say they are working on it for you? A lot of these “upfront” companies’ fees are whether or not the loan modification is completed or successful.
How long does a loan modification take?
Loan modifications can take some time. Because our processing is done in house, we can assure you the quickest of turn times.
What company should you use?
Here is the great news. We are now offering loan modifications. The really great news is the fact that we do not charge the outrageous fees that we are seeing out there. We want to see you or your friends keep your homes.
How much do we charge?
We will prequalify you for free! If at that time it looks advantageous, we charge $1295 upfront and upon completion the balance of $1000 is due. Payment arrangements can be made on a case by case basis.
Can I do the loan modification myself?
While it is definitely possible to complete a loan modification yourself, you should consider a few things first. One being that you may not be able to negotiate the best scenario because of inexperience. We can liken it to fixing your own toothache. Just get a pair of pliers and remove it, right? Or maybe a professional will be able to assist you and have better results.
OK! I have caught some grief over the prior analogy. so let me give you one more. Anyone can cut their own hair, but usually the result is better if you let a professional do it for you.
If the loan modification does not get approved, we can assist you from there. We will refer you to one of our short sale specialists and get your home sold. Again, we want to keep you from foreclosure. The proper order of events is try a loan modification first and then try to sell your home. if none of that works, a foreclosure may be unavoidable.
