With attractive terms and features, it is easy for homebuyers to find loan modification an interesting choice.
As it promises to lower monthly payments and wipe out some mortgage balance, this program seems like a good idea if you are experiencing a few financial setbacks.
What is a Loan Modification?
This home loan option is an agreement between you and your mortgage company to change the original term of the loan. These may involve a significant amount of payments, interest rates, and length of the loan. When the loan is modified, you can lower your monthly payment to make it more manageable.
Loan modification can be a good option if you are not eligible to refinance your loan or you’re facing a long-term financial hardship. It may also be an option if you are lagging behind on your monthly payment and you are likely to fall behind soon.
Should You Get One?
If you’re thinking of getting a loan modification, it is best to understand what you’re getting yourself into.Home and commercial loan providers like MyGreatLoan.com suggest knowing who your lender is beforehand. This can help you get a better modification and know your chances of getting more flexible terms. Mortgage providers like banks and loan companies offer different features and terms.
What are the Risks?
Some loan modifications can affect your credit score and have other tax implications. While it can somehow help you with your monthly payment, it can also harm your credit score.
To protect your credit, avoid trial periods. Going through a trial period before getting a permanent modification can affect your credit if the loan reduces your monthly payment. This is because the lender reports the payment to the credit bureaus as if you are paying less than the typical amount.
It is important to remember that banks and some lenders do not offer loan modification out of generosity. This is why it is important to understand this program before consulting your lender.