Your lender wants you to accept an offer for a loan modification. But is it a smart choice?
A lot of my short sale clients have either declined a mortgage modification or been turned down for one by the time they have made the decision to move forward with a short sale.
WHAT IS A LOAN MODIFICATION?
In a mortgage modification the lender makes permanent changes to the terms of your home loan resulting in a more affordable payment. Keep in mind that while a modification will reduce your payment, it will not reduce the amount you owe on the property. In fact, in most instances the amount you owe on the loan will actually greatly increase the amount or length of your loan, especially if you have a HUD partial claim.
This is the main reason most mortgage modifications ultimately fail. Loan modifications are not a long term solution for anyone who owes more on their home than their home could sell for (owners with negative equity).
A lower monthly payment is only helpful until you have to sell. It is then that most realize they are upside down on their mortgages and can not sell without a short sale.
IS A LOAN MODIFICATION RIGHT FOR YOU?
A loan mod may be a good choice if you:
A loan mod may not be a good cHoice if you:
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Last Updated on February 12, 2024 by Minna Reid