Mortgage Loan Mod: Prevent Foreclosure By Reducing The Monthly Mortgage Check
By: Rob Schmidt
Tips For Avoiding Foreclosure Through A Mortgage Loan Mod
A growing number of foreclosures is having a disastrous effect on attempts to negotiate an economic recovery. Homeowners who have already lost homes number in the hundreds of thousands, with many others in fear of home loss. For those who are in the foreclosure process, there are some things that you can do to help yourself. Here is some information about getting a mortgage loan mod.
Defining a Mortgage Loan Modification
Don't confuse a mortgage modification with a refinance on your home. The original mortgage loan consists of three components that combine to set the amount of monthly loan payment. The mortgage payment is defined by the principal, length of the loan repayment period and by the rate of interest to be charged. Modification does not require you to go through credit score checks, and other qualifying documentation procedures that would be required by a refinance.
Many homeowners today have discovered that they are trying to pay a mortgage that has payments greater than they can afford because the original loan was too large. The interest rates may have been a variable or adjustable rate or have been structured with a balloon payment after two or three years. A modification adjusts one or more of the three factors to bring monthly payments to a more affordable level for the homeowner.
What are the Requirements to Qualify for a Loan Mod?
The minimum requirements to obtain a loan mod are fairly simple and few in number. The first requirement is an inability to make the payments as structured. You, or another wage earner in the household may have become unemployed. Death or a major illness is accepted as a reason.
The mortgage payment must be more than 30 percent of your income to be eligible. Some modifications have been approved with percentages as high as 79 percent. The original mortgage can't have been issued less than nine months previously. Perhaps more importantly, the modified mortgage monthly amount must be at a level that can be maintained in the future.
Lender Actions
Banks that are part of the Federal Reserve Bank system have been instructed to do everything possible to turn back the rising tide of foreclosures in the United States. The sag in housing prices has affected every other sector of the economy. Although some foreclosed homes are being picked up at bargain basement prices by investors and speculators, the preferred avenue for economic recovery is to modify the terms of the mortgage so that the homeowner can continue to stay in the home.
Face Up to the Problem
Some homeowners in danger of foreclosure are so embarrassed by their financial woes that they do nothing. This is exactly the wrong action. A foreclosure in these economic times can be caused by dozens of factors interacting to cause a personal economic collapse.
Completing the process for a mortgage loan mod is not complicated, but it must be done correctly, and inaction could cost you your home. You can prepare for a call to your lender by gathering needed documents such as the original mortgage, income statements and projects and a plan for what you can do financially to solve the problem. Make sure you are realistic about projected earnings, or you could find yourself in the same position in a few months.
You can learn more about President Obamas mortgage plan immediately! You can stop foreclosure with a home loan modification fast and easy, when you follow a few simple steps. Click here to get your own unique version of this article with free reprint rights.
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