How Loan Modifications Work?

There has been a lot of attention in the last six months about loan modifications. Loan modifications are helping millions of homeowners keep their homes. With a loan modification, your lender modifies your existing mortgage to lower your interest rate, transfer any arrearages to the back end of your loan and extend your loan term. The end result is you now have a lower and affordable monthly mortgage payment.

Who Qualifies?

Homeowners who are at risk of losing their home and who are in default. There are several programs available, so you need to check with your lender as to which one you qualify for.

For instance, under the Government’s Making Home Affordable Modification Program, homeowners who are at risk of losing their home can qualify for a loan modification if they meet the following guidelines:
* Have secured your mortgage before Jan. 1, 2009.
* Have a primary mortgage of less than $729,500.
* The home must be your primary residence and you just reside there.
* Must fully document income by submitting your tax returns and paycheck stubs.
* Sign a financial hardship statement.
* Get counseling if your total household debt totals more than 55 percent of income.
* You can only modify your mortgage once under the program.

Loan modifications are a solution only if you have sufficient income to make the monthly payments. If you do not, then other options might work such as selling your home or selling with a short sale.
How Long Does the Process Take?

From beginning to end, a loan modification can take a couple months or longer to get approved. To speed the process up, you may want to consider hiring a professional such as a real estate attorney or loan modification specialist to negotiate with your lender. At HomeBackers we are industry experts that can help you negotiate a resolution with your lender. Our telephone number is 937-754-1111 and our website is