Four Benefits of home loan modification

The high rate of foreclosure has contributed to the need for commercial lenders, private institutions and government organizations to make out ways for consumers to opt for a home loan modification program. It may happen that you are facing a problem with the repayment of your home loan due to an unexpected change in your financial status. It is then that you seek a loan modification where you change your unaffordable mortgage repayments into affordable ones. The 4 benefits of loan modification program are:

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  1. Affordable payments: Affordable payments in the ultimate goal of those who seek a loan modification. In a loan modification program, you can extend the term of the loan as well as reduce interest rates to get payments closer to a rate that you can afford to pay each month. Usually, the range of the loan modification is 35-40% of the homeowner’s monthly income, to ensure that he pays off the other obligations and payments that he has incurred throughout the month.
  2. Eliminates late fees and penalties: Any late fees and penalties on the original loan are eliminated in a loan modification program. If you missed any payment on your previous home loan, then you need not worry. It is possible to roll them into the loan modification program which means that after some point of time you will once again be current on the loan.
  3. You can avoid foreclosure: A home loan modification program, above all, avoids foreclosure of your home. Since the loan modification is a rewriting of the existing loan, therefore the foreclosure process is halted and the homeowner is given another chance of repayment through regular payments. This way the homeowners preserve their finances and the lenders save on the costs needed in a foreclosure.
  4. Lender recovers costs of home loan: In a foreclosure, the lender does not receive any kinds of payments above the amount owed on the home. While the lender has to repay the fees which are associated with the sale of the home, loan modification program helps the lender to receive regular payments. When a lender allows a loan modification, this ensures financial stability through the financial corporations that fund the mortgage.

A home loan modification program benefits you in more ways than one. Apart from helping you with easy repayment of the mortgage, it also saves your home from foreclosure. But loan modification affects your credit score if there is a lack of coordination between the bank’s loan mitigation department and the foreclosure department. Therefore, check everything so that you do not hurt your credit score.

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