You Have Got a Loan Modification, Now What's Next


Well you have worked hard and you did what you needed to do to get your modification. Your loan has been modified, so what should you expect next.

Once your loan has been modified you will get written documentation indicating that your loan has been modified. The loan will pick up any past due payments outstanding on the loan, and put that amount amount into the total unpaid principal balance. In some cases some of the principal balances can be lowered to help out homeowners more, to try to avoid foreclosure; That is right. Lets say you owe $ 300,000 on your outstanding mortgage balance, then you get a loan modification and you suddenly see your Un paid principal balance is now at $ 250,000; that is very possible and is becoming more and more common these days in today's tough mortgage climate. The loan modification will include the new terms which includes the new interest rate, whether it is an Adjustable Rate Mortgage or a Fixed Rate Mortgage, the term or length of the loan, the total outstanding balance of the new loan, and the next due date . The papers will need to be signed, notarized, and returned back to your mortgage company as soon as possible.

There use to be charges associated with loan modalities, but with the latest government program under President Obama those charges have been eliminated. In the past with the older statements, a company, a real estate agent, a broker, or an attorney may charge a person $ 1,500- $ 3,000 on average to complete a loan modification due to all the work and follow up that is involved in the whole process. Then the mortgage company or the loan servicer would also charge, lets says another $ 1,300 in fees associated with their attorney fees, court and recording fees. That amount is then charged on top of your mortgage balance to get the new lower house payment. Before it is all over with your could have had another $ 4,300 of new charges just to get a new lower payment, which will end up saving you a great deal of money over the life of the loan.

The modification is compared to a refinanced, but it is a loan modification. They do have a lot of similarities but there are different. A loan modification is primarily for homeowners with poor credit and someone not wanting to be charged the fees of a refinance to get lower mortgage payments, but ironically many homeowners doing a loan modification will end up with almost the same amount of charges to get their mortgage lowered. Most homeowners with good credit will just go out and do a refinance, to just get it over with. Plus, a refinance is usually completed in about 2-3 weeks unlike a modification, which takes about 2-4 months with no guarantees. But not everyone can refinance, you need decent credit with a fairly good payment history to be accepted and get a good interest rate worth completion.

When the Modification process is completed, then the loan will be bought current. The loan will start reporting current with the credit bureaus once again. It is now the homeowners responsibility to maintain their current mortgage payment status with the credit bureau, or else they might find themselves back in the same position as they were before the modification was completed. One of the best way to do that is to not take on excessive obligation just because you received a new lower house payment. Now unforeseen circumstances are fine, since a lot of times there is no way for anyone to see those types of things coming. For example: losing a job, or death in the family, other than that play it safe by keeping your expenses down in these tough economic times. Good luck with your housing endeavors.


Source by Oswin Grant

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