What is Loan Modification?
If you’re one of the many Americans who are staggering under the weight of your mortgage, two words may yet save you: loan modification.
Simply put, a loan modification is a retooling of your home loan – by adjusting the interest rate, the loan’s duration or other factors – until it’s low enough each month that you can afford to pay it.
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What can a Loan Modification do for me?
Lower and fix your interest rate
Your lender may lower your interest rate considerably. In addition, if you have an adjustable-rate mortgage, the loan modification must leave you with a fixed interest rate, so the lender cannot raise the rate later.
Extend your term
The term is the time you have to pay off the loan. For example, if you’ve been paying 5 years on a 30-year mortgage, you have 25 years remaining in your term. A loan modification can extend the term to spread out your payments over a longer period of time, thus reducing your monthly payment.
Reduce your principal balance
Sometimes, lowering your interest rate and extending its term does not provide sufficient relief. In such cases, your bank may be willing to agree to lower the balance due on the loan. Why? Because in today’s market, your home may not be worth nearly as much as you paid for it. If the bank were to foreclose and sell the home, the sales price probably wouldn’t cover the balance due. Many banks would rather lower the balance due and enable you to keep paying than go through the hassle and expense of kicking you out and selling the home.
Forgive penalties and late fees
If you have missed a couple payments, your lender has probably charged you extra fees or penalties for the late or missed payments. During a loan modification, they must drop these fees from the amount you owe.
Roll delinquencies and costs into the principal
Your lender knows that if you are missing payments you probably have insufficient funds to catch up on those missed payments or pay any of the legal fees required to process your loan modification. To help, the lender can roll all of your delinquent payments and any additional costs that qualify into the principal, so you can pay them off over the course of many years.
Re-amortize the loan to lower your payment
Once the lender calculates the new balance due (after lowering the principal balance or rolling delinquencies and costs into the principal), it can recalculate your monthly payments with the goal of reducing what you pay.
Why Use a law firm, such as Hoffman, Larin and Agnetti, PA?
While it might seem like loan modification is something you can do on your own, you really need the assistance and guidance of a loan modification attorney.
What are the advantages of an attorney-based loan modification?
- Uses the judicial system in your favor
- Takes advantage of consumer protection laws
- Systematic approach
- Has a team in place
- Objective view of the situation
- Creditors respond better when they hear the word “attorney”
At Hoffman, Larin and Agnetti, PA we will determine your needs. We are experienced in talking to and negotiating with banks. When we present your loan modification application, we will present the lenders with multiple studies, facts and figures in order to induce them to agree to modification. When you are represented by Hoffman, Larin and Agnetti, PA, the lender will be advised that our clients understand their options, which include foreclosure defense and bankruptcy.
Hoffman, Larin and Agnetti, PA offers a free consultation and reasonable payment plans. At your free consultation, we will discuss with you not only loan modification, but all other options, such as Chapter 7 and Chapter 13 Bankruptcy and Foreclosure Defense.