Are you struggling to pay your mortgage loan? If so, a loan modification may be an option for you. Loan modification can make your loan more affordable and help you avoid foreclosure. But before applying for a loan modification, it’s important to understand what it is, and whether or not it is right for your circumstances.
This article will provide some do’s and don’ts when considering a loan modification as well as how an experienced loan modification attorney can help you through the loan modification process.
What Does a Loan Modification Change?
A loan modification is a restructuring of your loan agreement that changes one or more of the terms in the loan. This could involve the following:
- Lowering the interest rate
- Extending the loan duration
- Forgiving past-due fees and late payments
- Adding payment deferment options (aka “principal forbearance:” where the lender agrees to accept a portion of the unpaid debt and add it to the end of the loan)
The overall purpose of loan modifications is to make loan repayments easier and to bring relief to the borrower in the form of lower monthly payments.
Is a Loan Modification Right for You?
Before applying for a loan modification, it’s important to consider why a loan modification might be the best option for you. Generally speaking, loan modifications are most beneficial for those who can pay their mortgage loan but are struggling due to financial struggles or other extenuating circumstances.
The Do’s of Loan Modification
What you do before loan modification can make all the difference. Here are the do’s that you should consider before seeking a loan modification:
1. Do Hire An Experienced Loan Modification Attorney
Even if you decide to take on loan modifications yourself, it is recommended that you seek out an experienced loan modification attorney first. They will be able to walk you through loan modification step-by-step and help you understand the loan terms more thoroughly.
2. Do Gather All of Your Documents
To successfully modify your loan, it is important to have all of your loan documents ready (make sure to include every single page). This includes loan statements, proof of income, bank statements, and any other relevant paperwork. Also, include a hardship letter explaining to the lender the circumstances that led you to be unable to keep up with the loan payments.
3. Do Keep Making Payments
Making loan payments throughout the loan modification process will give you a better chance of approval and make the loan terms more favorable for you. This will also show that you are committed to paying back your loan and demonstrate to the lender that you are a responsible borrower.
4. Do Understand Your Finances
Before applying for a loan modification, you should have an understanding of your current financial situation and be able to provide accurate information about your income, debts, assets, and expenses. Keeping accurate records will help ensure your loan modification goes smoothly.
5. Do Make Sure You Are in Communication with Your Lender/Servicer
Before seeking a loan modification, it is important to be in contact with your loan servicer. They will already have a good idea of the loan terms and can help you determine what loan modifications might work best for you.
6. Do Understand the Documents You Are Signing
Before signing loan modification documents, you should make sure you understand them first. Read the loan modification agreement carefully and ask any questions that you may have to a loan modification attorney before signing.
The Don’ts of Loan Modification
Just as important as understanding what you should do when applying for a loan modification, it is also important to be aware of what not to do:
1. Don’t Take on a Loan Modification Alone
No matter how confident you may be in a loan modification, it is always recommended that you seek out legal help from an experienced loan modification attorney. They will be able to provide the best advice and ensure that your loan terms are favorable for you.
2. Don’t Wait Too Long to Apply for a Loan Modification
The sooner you apply for a loan modification, the better chance you have of approval and getting more favorable loan terms. Waiting too long can negatively affect your loan modification process, so make sure to start applying as soon as possible.
3. Don’t Put off Making Payments
It is important to continue making loan payments throughout the loan modification process. This will show that you are still working towards paying back your loan.
4. Don’t Lie or Omit Information on Your Application
Be honest when applying for loan modifications and provide accurate information about your finances. Lying or omitting information on loan modification documents can result in loan denial or even legal action taken against you.
5. Don’t Fall for Loan Modification Scams
Some loan modification companies may offer to help you get favorable loan terms, but be wary of loan modification scams. Make sure to thoroughly research loan modification companies before working with them and only use loan modification attorneys who are highly qualified.
Some common loan modification scams include:
- Companies posing as government agencies or programs
- Companies charging fees before loan modifications are made
- Companies not providing loan modification services after payment
- Companies promising loan modifications regardless of the individual loan circumstances
- Companies requesting you to sign a warranty deed or quitclaim deed (this will transfer the title to the loan modification company, and you will lose ownership of your home)
Note: Two credible government-sponsored mortgage modification and refinance programs are www.makinghomeaffordable.gov and http://portal.hud.gov.
6. Don’t Give Up
Loan modifications can be a lengthy process, but it is important to stay persistent during the loan modification process. Make sure to work closely with your loan servicer and loan modification attorney to ensure that you get the best loan terms possible.
Let Our Loan Modification Attorneys Help Ease Your Burden
If you are struggling to pay your mortgage, don’t wait until it’s too late. Loan modification can be a stressful and complicated process, but our loan modification attorneys at The Mellor Law Firm are here to help.
With years of experience in loan modifications, we provide the best services:
- Comprehensive loan modification assistance
- Extensive knowledge of loan modification guidelines and regulations
- Knowledgeable loan modification attorneys who will fight for your best interests
- A loan modification process that is tailored to fit your individual loan needs
We are dedicated to providing assistance and helping individuals who are struggling with loan payments get the loan terms they need. With our loan modification attorneys, you will have a partner who will strive for the best loan terms possible. Schedule a consultation or contact us today at (951) 221-4745 to get the guidance you need.