What is the mechanics of a loan modification or also known has a mortgage modification: the best definition is….A loan modification is the restructuring or altering the existing mortgage (note). This is an attempt to help the homeowners afford their monthly mortgage payment that has become difficult due to a hardship preventing them from making their current house payment.
Several methods can be used to accomplish this. They may be used individually or a combination, either way the goal is to make the new mortgage payment affordable.
- Lowering the interest rate
- Extend the term of the mortgage
- Reduce the over all principal of the loan
- Forgive or move late fees, past due payments into the loan in a foreclosure situation
- Turn a adjustable rate mortgage (ARM) into a fixed rate
The Obama Administration put the “Making Home Affordable Plan” into place to help the 7 plus million people who are or will be having problems making their house payments and possibly facing foreclosure. This plan is to compensate the lenders or servicers of the mortgage to come up with a lower house payment for those homeowners. Has of right now there have been just a fraction of this money used.
These are your basics of what a Loan Modification is. If you are dealing with a hardship in your life and having difficulty in making your house payment, then a loan modification may be the road to take. The fact is….it cost less to do a mortgage modification than it is to Refinance. More information is available in this FREE report on “10 Things you Should Know about a Loan Modification”.
Be sure to visit UtahRealEstateExpert.com for information on Loan Modification.