We’re a culture of do-it-yourselfers – that’s part of what makes America great!  We get stuff done the way we want it – when we want it.  That’s the way we are.  When it comes to your home loan modification though, I’d like to suggest you take a different strategy – leave it to the professionals!

I have one of those really cool four door Jeeps.  I love my Jeep.  I drive it every day.   But, when it breaks I don’t do the repairs, I take it to the dealership and let them repair it correctly.  I’m not a mechanic, I went to school for business management and finance – not to fix engines, fuel injectors, air conditioning systems, transmissions etc.. I leave it to the professionals – people that are trained on how to fix those particular parts.  This way I know the job is done right and I can sleep well at night knowing the Jeep’s not going to blow up tomorrow because I didn’t connect something right.

Your home mortgage works in very much the same way.  Unless you are well versed in mortgage banking, finance, negotiation strategies, and the law surrounding home loan lending – you’re definitely going to come out thousands of dollars ahead by engaging the services of a professional loan modification company.

It is true that you will have to pay the company for their services BUT I promise you, if you have chosen a quality loan modification firm, it will be worth every penny.  Even a 1% difference in interest rate of the life of your loan will wildly trump the investment you make in hiring an expert that deals with mortgage modifications day in and day out.

Let’s say you worked with your lender on your own and got them to agree to an interest rate of 5.5% on a loan balance of $200,000 for 30 years – your monthly payment is $1,135.58.  On the other hand, if you’d used an expert loan modification company they would have known that most loans similar to yours are being set at 4.5% interest (non 5.5%) and they fight for that and get it… you’re new monthly payment would be $1,013.37.

The difference between the two monthly payments over a 30 year time frame would be a total of $43,995.38!  And this is just with a 1% difference in interest rate.  What about waiving fees, forbearance of principle, even forgiving principle balances… there’s all kinds of financial benefits you get when you use a professional modification service.

I can promise you this…. The banks are playing for their own self interest.  I’ve seen some really ugly homeowner negotiated mortgage.   They’ve ended up with a temporary band aid and I’m willing to bet they will be right back in the same situation in a few years.

From one perspective you could say that, yes, the author is biased because I am consultant for an expert loan modification company, but on the other hand that gives me a unique perspective of  talking to hundreds of homeowners about what their banks have told them… and what their banks have offered them – and it’s not pretty out there!  Most of our clients are homeowners that tried to modify their home loan on their own.

Please heed my advice… from someone on the inside… use a professional firm with expertise in this area.  It will be worth every penny you have to beg, borrow, and scrape up to make it happen!

There is a lot of confusion out there as to what home loan or mortgage modification actually is.  I get questions every day about what’s involved, which program is right for me, what’s this Obama program… those are usually followed up by should I do it myself or seek professional help (More on that in another article).

Certainly these are confusing times.  I speak with many homeowners every day who are wondering what is going on and what to do.  The economic downturn we are in has created unparalleled hardship in terms of the homeowner and with the financial sector.

So let’s cut to the chase.  The banks DO NOT WANT YOUR HOME.  What they do want is a performing loan – by performing I mean they want a homeowner that pays their mortgage month in and month out.  Banks are not in the real estate business – they are in the lending business.   If they take back a person’s home then the bank has their money tied up in a home that isn’t earning them any interest or fees.

However, if the homeowner simply cannot make payments then the bank has no choice but to foreclose on the property and take ownership of it to try and recover the principle amount of their loan.  These situations are unfortunate and are happening all around us.  Enter the loan modification program.

It really doesn’t matter if you’re talking about mortgage modification, home loan modification, President Obama’s Making Home Affordable program or any of the other of the many versions of a loan modification.  All these names are referring to same concept that you and your mortgage company have a common interest – to keep you in your home.

Again, the mortgage company is in the business of making money off of loans.  It’s in their best interest to help keep you in your home.  For that reason they are willing to change or modify the terms of the original loan so that the loan is more affordable for the homeowner and they have a higher probability of repaying the loan.

Most homeowners who are experiencing a financial hardship want to stay in their home but are experiencing a decrease in income for one reason or another.  The homeowners hardship and the banks desire to have a performing loan makes a loan modification a perfect match.  In essence you and the bank are partners working together to get through this tough economic situation with a mutually beneficial outcome.

The process of “modifying” a loan refers to the negotiation process that takes place between you (i f you choose to do it by yourself or another person or entity that you have selected to negotiate on your behalf) and your mortgage company.  At the end of this process your mortgage company will present you with new loan terms that may involved any combination of these:  a lower interest rate, extended repayment term, or maybe even forgiveness of a portion of the principle balance owed – all of which combine to lower your monthly payment to a more affordable level.

Once your loan is modified you begin making your newly agreed upon monthly payment.  Your loan is now current with the mortgage company meaning that any late payments are forgiven, waived, or added back into the principle balance of the loan.

There’s much more here to talk about but I’m out of space….  Be sure to check out our website for more details on this subject.

© Justin Richards 2009
Article may be reprinted or transmitted as long as author’s bio below is included with the article

About The Author

In 1998 Mr. Richards graduated from University with a bachelor’s degree in Business Management and Finance. He founded a successful company that helped hundreds of homeowners to get on the path to financial freedom. He also over 7 years experience in the home mortgage finance industry. He loves helping people! Especially when it comes to helping them keep their homes and pay off their debts.

Mr. Richards is happily married with four beautiful children.  He is currently serving as a consultant for SureFast Loan Modification.com

Homeowners trying hard to hold on to their home may qualify for a loan modification and not even know it. The reason is lenders will make less money than they would have under the original mortgage terms, even though both borrowers and lenders will be better off in years to come. It should be obvious that banks will make every effort to hold their borrowers to their original conditions. Eventually, on the other hand, default and the foreclosure process become inevitable. When the situation reaches this stage, the best response is to mull over a loan modification.

Homeowners have numerous choices they can consider taking before they have to face foreclosure. As soon as your finances have become dire it’s time to call your bank and see what choices are available. Obama’s Home Affordable Program is one of numerous federal programs now out there that are tailored to support homeowners trying to remain in their homes. Programs such as this can be the starting place for finding help in your struggle to work your way through the process.

Loan modification modifies your current loan so you are able to make payments on time.

You can decrease your monthly payment by bringing down your loan amount to the level of your house’s actual value; either reducing the interest rate or attempting to get a fixed rate; and changing your loan period to a longer time frame. Start fresh with a new mortgage, past due payments can be put back into your new mortgage.

A loan modification is a convoluted process demanding specific criteria to be met. The main criteria is showing that you are suffering real financial crisis. It is better if this financial crisis is a result of events out of your control.

Some difficulties are out of, mortgage loan, your control, like getting sick, getting separated,being called for military duty,job loss, a dying family member who provided income, or having a bad mortgage. High levels of credit card debt will you unless you can prove that you had to incur the debt to buy food and pay off bills, even if the debt is a hardship. It is a precarious balancing act.

You must prove to the bank that your intent is to keep making mortgage payments. You are expected to create a payment plan and household budget.

The mortgage loan modification programs have numerous rules, one is that the new payment must not be more than 31% of the gross income you make in a month. This can assist you in determining a budget that suits you.

Don’t let your home to be taken away by the bank, learn more about the opportunity of getting a loan modification. Banks would rather take a nominal loss as opposed to having another foreclosed property on their list. A bank is willing, right now, to help you with your mortgage needs.

Numerous individuals can utilize a mortgage loan modification service and have the opportunity to stay in their house during these difficult economic times.

Borrowing and lending is a complex process and is not meant for the light-hearted. Debtors and lenders are subject to continuous fluctuations in the market forces. To flatten out these ups and downs, the market offers handy tools such as secured loans, the popular one being mortgage loans.

Here is a basic guide to understanding this variant of a loan in a simplified manner and how to tackle any anomalies by means of mortgage modifications.

Secured Loan

Whenever the borrower takes a loan from the lender, he or she can pledge some asset, most commonly property, as a collateral or security to the lender.

If the loan repayments are not met by the debtor then the lender such as a bank can cancel the loan and seize this asset in order to pay for remaining cost of the loan.This forms the main purpose of the secured loan wherein the creditor has a cushion against future impacts. Also as opposed to an unsecured debt, the debtor can strike a better deal with the lender, now that the creditor has some assurance from the former. A secured loan has better interest rates and lower periodic payment options as compared to an unsecured type loan.

Even after securing the loan if the debtor falls short of the payments then there is a risk of foreclosure and seizure of property in case of a mortgage loan.

Avoid foreclosure – Mortgage modification program

Nevertheless, the market has asolution to the foreclosure problem too in the form of a loan modification or refinance. The borrower in crisis can inform the lender about his/her shortcomings and can apply for a loan modification. If approved the lender can alter the interest rates at which the loan was granted.

The burden, mortgage loan, of the periodic payments can also be lightened by altering the total time period of the loan.Mortgage refinance is a propitious alternative to go for when hit by the storm of foreclosure.

If you’re one of the many homeowners struggling to keep your mortgage on track, one solution just might save your home: loan modification. Essentially, this involves getting your lender to change your home loan terms to something you’re more comfortable with. Government programs have helped make home loan modification a more viable choice for the more than 5 million homeowners currently behind on their mortgages.

But as with any other tactic, a home loan modification program is only as good as you can make it. There are fraudulent companies and unethical lenders out there, and it’s easy to make costly mistakes. If you’re thinking of getting a home loan modification, here are some tips and strategies to help you get the best deal.

Start early.
In the past, only people who were seriously delinquent or already foreclosure could get home loan modifications. However, lenders have become more lenient as government support gave them more incentive to modify loans. Starting early shows the lender that you’re responsible and determined enough to keep your mortgage on track.

Get professional help.
You may be tempted to handle the loan modification on your own to save money, but getting help from the pros can give you a serious advantage. A loan modification attorney or representative can get you in touch with the right department, help you gather the right documents, and plan your application according to your lender’s policies.

Do your research.
Most loans today are either owned by one bank or shared by many as mortgage-backed securities. Generally, sliced-up loans are harder to modify because there’s more than one entity with an interest on the loan. Find out who owns your loan by calling your lender or checking government sites like Fannie Mae or Freddie Mac.

Provide accurate information.
One of the first requirements for a home loan modification program is a hardship letter. Here, you explain why you fell behind and how you plan to get back on your feet. Lenders will need to verify all your claims, so don’t try to embellish your story. As much as possible, back it up with documents such as pay stubs, tax forms, and bank statements.

Set realistic goals.
Many lenders will offer new terms that are only slightly better than your current one. Don’t settle for a less-than-ideal deal out of desperation. A good loan modification attorney can help you negotiate more effectively and get a home loan modification program that makes financial sense for both you and your bank