Mortgage modifications help hundreds and even thousands of homeowners get out from their crushing mortgage debt through refinancing or loan modifications. However, there are many common blunders people make when looking at mortgage modification as a solution to their debt crisis.
Refinancing With Care
Refinancing a mortgage can result in a lower monthly payment and save you money in the long run, but mortgage modification contracts often contain provisions that, if not followed closely, could result in thousands of dollars in extra payments and penalties.
For example, some mortgage companies include a pre-payment penalty in the contract, stating that if the property is refinanced or sold prior to a specified date some severe penalties are imposed, sometimes exorbitant amounts like six months of interest on the loan’s original balance. These types of clauses are not typically in contracts with reputable lenders, but less than reputable ones may attempt to sneak them into a contract, and it’s important to be aware that your new terms may not be so wonderful after all.
Arbitration clauses are another sign of underhanded dealing. The law offers many protections to a homeowner, but an arbitration clause says that a third party may be brought in by the lender to resolve any disputes, effectively waiving those rights you have under the law.
Refinancing to reduce your interest rate today works for many homeowners, but for that reason there are as many less than reputable companies out there offering mortgage modification programs that are disingenuous or outright immoral, stacking high fees and hidden penalties one upon another in the effort to take advantage of those seeking help. Consult with a qualified foreclosure attorney to get the best advice on which lenders to choose and what kind of refinancing program is best for your situation.