Mortgage Loan Modification Overview

Are you having problems paying off your housing loan? Do you fear you might be about to lose your home to your bank or loan provider? Before you stress yourself out thinking about this possibility, consider mortgage loan modification. This is a program that allows your loan to be reinstated so that its terms are more suited to your financial capabilities. All it takes is for you to get yourself familiar with the system and then you start making it work for you.

So what is a mortgage loan modification? How does it work? Basically, it is just like a refinancing modification program which allows you to adjust your existing loan to more affordable terms. With this, you will not need to re-loan but rather, you just have to modify your existing loan. The process makes it much easier both for you and your loan provider.

Since we have identified the nature of the program, it is now a question of who is eligible. This program applies only to mortgagees who applied for their loans before January 1, 2010. There are two classifications of eligibility for a mortgage loan modification. One is for people with updated mortgage payments and the other is for those who have missed payments but have paid at least 31% of their total mortgage.

Since it is a mortgage loan modification, the government will be in the middle the system being the only entity allowed to regulate modifications. It subsidizes the cost resulting from the drop in payments from the regular 38% to the discounted rate of 31% based on the modification program. If you’re asking how else a loan may be modified to suit the financial capability of the mortgagee, there are a number of possibilities. The interest rate on the loan may be reduced, the terms of payment may be extended up to forty years, the mortgagee may be offered another type of loan or a combination of any of these three may be applied possibilities. Aside from this subsidy, the government is also actively pursuing a campaign that motivates banks and other loan providers to participate in the program.

It is important, however, to differentiate between a forbearance agreement and a loan modification agreement. The former is a temporary solution offered to mortgagees who are undergoing financial difficulties which are expected to be short-lived while the latter is a long-term program for those who are completely unable to pay off an existing loan.

If paying your mortgage has been a major issue, it might be time to apply for a mortgage loan modification. Worrying alone won’t save you. You have to act on the situation and act on it decisively by exploring your options for getting the best loan modification program for you.

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