Loan Modification: An Alternative To Avoid Foreclosure

By: Thomas Bladecki

A common alternative to a home foreclosure is doing a loan modification, essentially a repayment plan. Working out a loan modification with your lender will help you to avoid foreclosure and protect your credit. While most people facing foreclosure work to try to save their home, the bottom line is that they simply cannot afford it. Many are not in a financial position to refinance their loan for a reduced payment and establishing a repayment plan is difficult as the payment will be higher, in order to repay the default amount. This is where a loan modification program comes in. A successful loan modification allows borrowers a second chance to pay the mortgage by giving them payments that are more manageable.

Homeowners often believe that the lender is the enemy with the, persistent calls, letters, and delinquent notices this is not the case; your lender is the only one that can help you save your home. In just about all cases of stopping or avoiding a foreclosure, your lender must agree to the terms. Once a borrower has fallen behind in payments the lender will do whatever they can to try to get the payments back on track with the homeowner. Talk to the lender and try to negotiate a loan modification, in most cases you will need to behind in default by several months prior to them entertaining the idea.

The lender and you both have great reasons to come to a mutually beneficial and agreeable solution to get the default caught up and the loan repayments back on track. There are other options to avoid foreclosure, refinance the loan, and sell the home depending on the situation. In order to accomplish the ultimate goal of protecting your most valuable asset, talking to the lender is the only way to avoid foreclosure.

Unfortunately, not all banks offer loan modifications as a viable solution, with foreclosures are at all time highs; more lenders may offer loan modification programs that they did not previously offer to homeowners. Most of the large banks and mortgage servicing companies are the ones that do not offer this is a solution, consider using a local mortgage company to refinance your loan and avoid foreclosure.

Loan modifications are time consuming and often have similar qualifications of a refinance or new mortgage loan. As long as you can prove a stable income and have recovered form the hardship, a loan modification may be your answer to saving your home from foreclosure.

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