Avoid Foreclosure – Part 3: Loan Modification

Here at Flippin A Renovations, we are very familiar with stopping foreclosures. Let’s talk about another option homeowners have when they are facing foreclosure: A Loan Modification.

What is a mortgage loan modification?

A mortgage loan modification is a change to the terms of an existing mortgage loan made by the lender to help a borrower avoid foreclosure or other financial hardship. The modification typically involves one or more of the following changes:

1. Reducing the interest rate on the mortgage
2. Extending the term of the mortgage
3. Adding missed payments to the balance of the loan
4. Reducing the principal balance of the loan
5. Changing the type of mortgage loan (e.g., from an adjustable-rate mortgage to a fixed-rate mortgage)

The purpose of a mortgage loan modification is to make the borrower’s mortgage payments more affordable by reducing the monthly payment amount. This can help a borrower who is struggling to make their mortgage payments due to a financial hardship such as job loss, illness, or a change in income. A loan modification can also help a borrower avoid foreclosure and stay in their home.

A mortgage loan modification is not the same as refinancing. Refinancing involves taking out a new mortgage loan to pay off the existing mortgage, whereas a loan modification involves making changes to the terms of the existing mortgage loan.

How can I use a loan modification to stop my foreclosure?

To stop a foreclosure using a loan modification from your mortgage company, you will need to follow these steps:

1. Contact your mortgage company as soon as possible and explain your situation. Explain that you are having difficulty making your mortgage payments and want to explore options to avoid foreclosure.
2. Ask your mortgage company about the loan modification process and what options are available to you. Be sure to ask about any fees associated with the modification.
3. Gather all the necessary documentation that your mortgage company will require to process the loan modification. This may include proof of income, tax returns, and a hardship letter explaining your situation.
4. Submit your loan modification application and all required documentation to your mortgage company. Be sure to follow up regularly to ensure that your application is being processed.
5. If your loan modification is approved, make sure you understand the terms and conditions of the modification. Be sure to make all payments on time and in full.
6. If your loan modification is denied, ask your mortgage company about other options to avoid foreclosure, such as a short sale or deed in lieu of foreclosure.

Remember that time is of the essence when facing foreclosure. The sooner you take action and contact your mortgage company, the more likely you are to be able to find a solution that will allow you to keep your home. The number one mistake homeowners make when facing foreclosure is not taking action!

If you are considering using a loan modification as a solution to your foreclosure, call us anyway! We can be your backup option or what we like to refer to as the “spare tire” option. In the event you cannot qualify for the loan modification or cannot get approved in time we can be there to give you an all cash offer. This atleast saves your credit from foreclosure!

Call us today at 903-231-3927
-Flippin A Renovations Team