Most homeowners in the country today have loan modification on their mind especially the ones who are struggling with their mortgage. In fact, loan modification has become one of the highest searched keywords on the internet right now. People are trying to learn more about modifying their loans and how to qualify for a mortgage loan modification.
However, even though families are trying to learn more about loan modifications, there are several misconceptions which results in many homeowners either not applying for modifying their mortgage or getting frustrated after applying for one.
We take a look at five of the most common misconceptions there are about getting a loan modified
1) the most common mistake homeowners make is to think that if they have not missed a mortgage payment, they are not eligible for a loan modification. In fact many homeowners do not even apply or check with their mortgage lenders whether they qualify or not due to this misconception.
The fact is even if you have not missed a mortgage payment, you may qualify for a loan modification if you are struggling to make a payment. For example, employers are reducing hours or cutting overtime pay which leads to less take home pay for employees. This is a hardship that could qualify for a loan modification if you can verify your situation. Now if you have missed your mortgage payments due to some genuine difficulty, then it makes your case even stronger as you then have good reason to get a loan modified. If you do not have any valid reason or difficulty in repaying your current mortgage, then banks are unlikely to modify your loan. So every homeowner should remember that if they are experiencing difficulty in meeting their mortgage requirements or their interest rate is about to adjust and they won’t be able to meet the new monthly rate, they then have a stronger case for qualifying for a loan modification.
Whether you have missed your payment or feel you are about to miss a payment, you can still qualify for a loan modification as long as you can demonstrate properly to the bank that your payment has or will become unaffordable.
2) Loan modifications take about 90 days or three months to complete. A lot of homeowners are under the impression that it takes only 30 days to get a loan modified. This is of course mainly due to the false promises made by loan modification companies desperate to get your business. But in reality it takes a minimum of 90 days to get a loan modified and anyone telling you differently are not telling the truth.
3) Another misconception that certain homeowners have is that they can reduce their principal balance with a loan modification. While in very rare cases this is possible, in most cases banks or mortgage lenders will not reduce the principal balance and they do not reduce the principal balance on first loans. They can only offer a modified mortgage repayment plan which will make your mortgage affordable and allow you to keep your home.
4) Homeowners who have already been served a foreclosure notice often feel that they have no option but to let their house go to foreclosure auction and lose their home. The fact is it is never too late to get a loan modification and save your home. But obviously if your bank has already served you an auction notice, you need to act extremely fast, contact a loan modification consultant and have them apply with your bank for a mortgage modification immediately. It is better to go through a professional in this case as you cannot afford to lose any time and a loan modification consultant will know exactly what documents you require and how to go about contacting bank executives and negotiating with them.
5) The last most common misconception about loan modifications is that it is too expensive. Homeowners get completely turned off by the exorbitant prices charged by loan modification companies and attorneys which are upwards of $4000 and to be paid up front.
Families worried about loan modification costs should know that there are a few companies who do not charge anything up front. In fact, they don’t charge any fees until your loan modification application has been approved by your mortgage lender. Homeowners should try to contact such companies and make them apply for a loan modification on your behalf.