Can You Save Your Credit With Mortgage Modification?

: Chris Lee Law Firm

  Filed under: Mortgage Modification

Loan ModificationMortgage loan modification has benefited millions of Americans by reducing the principle on their loans their monthly payments through refinancing. Many feel like they are finally getting a square deal after the neighborhood home value has plummeted. This is not always the case. Banks have a number of weights and measure they employ to determine the viability of refinancing a borrower. Some of them may cost you more than a short sale or a foreclosure in the long term.

Temporary Loan Modifications

Many banks are loath to lose any money on the conditions of the original loan agreement. Faced with borrowers who are having difficulty making payments, banks will often agree to temporary loan modifications for a start. In a TLM, the borrower is allowed to pay a lower interest rate in the short term. If the borrower pays as agreed in the TLM, the bank may agree to permanent refinancing.

Short Sale, Foreclosure, Loan Modification; what do I do?

You can’t have it all at once. Commit to one and roll with it. Depending on your current and projected financial status, you should know what is best for you. Banks will not allow you to try for a short sale AND refinance. Once you have made a steady and sober estimation of your financial future, make a decision. Banks will be more willing to work with someone who is consistent and timely, too.

Loan Modification not always a money-saving option

Banks have all matter of charts and ideas for maximizing profit, even in the worst economy. Banks determine what you can pay based on a percentage of what you make. Your home may be worth half of what it was, but the bank is going to stick to its guns and may readjust your mortgage agreement so that you pay more. Many banks’ charts and rulers for issuing mortgages are based on 38% of what you make. In other words, if you are making a lot, the banks indices may determine you should pay more.


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