Tips For Getting a Mortgage Modification
A mortgage modification is a process by which a lender and a homeowner agree to change the terms of a mortgage. Mortgage modifications assist homeowners by allowing them to keep their homes by making the mortgage more affordable, typically by lowering the monthly payment. Mortgage modifications assist lenders by avoiding the expense and time-consuming process of foreclosure. Though a mortgage modification can be a win-win situation for lender and homeowner, getting the process completed can be difficult.
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Contact the Lender
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Unexpected bills, loss of employment and other problems can make paying a mortgage difficult. As soon as there is a sign of a problem, a borrower should contact the lender, discuss the situation and request information on applying for a mortgage modification. Borrowers do not have to wait until they are behind on the mortgage payment to request a modification. Borrowers should follow instructions from the bank on applying for a modification and document all conversations with the bank.
Get Professional Help
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After contacting the bank about a modification, a borrower should also seek the assistance of a loan modification counselor. The department of Housing and Urban Development (HUD) can refer borrowers to certified counseling agencies. Like the banks, these counseling agencies are may be overrun with clients, so early contact is important. These agencies are experienced with the loan modification process and can help borrowers negotiate with the bank and expedite the modification process. Most importantly, these agencies know the laws and regulations regarding the process and can protect a consumer's rights.
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Avoid Scams
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Many people and groups are offering their services to help homeowners get a mortgage modification. These service providers may be able to help homeowners with more personalized service than the HUD-certified counseling agencies. While there are effective service providers outside of the HUD-certified counseling agencies, there are also those trying to take money from people in a desperate situation. Before choosing to use any of these services, homeowners should check into the provider by requesting references, looking for complaints with the Better Business Bureau and checking license information.
Alternatives
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There are other alternatives for borrowers to a mortgage modification. One option is to refinance the loan with another lender. A refinance to a lower interest rate may significantly reduce the borrower's monthly payment. Another option is a short sale. A short sale is a process under which the lender agrees to the sale of the home for less than the amount remaining on the mortgage. Borrowers should carefully research the short sale process; many times the home is sold but the borrow still owes the lender the difference between the selling price and the amount of the mortgage.
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References
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