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Simply, a loan modification is a permanent or temporary adjustment to your current mortgage loan. A loan modification will allow you to keep your current loan with an adjustment to the terms creating a reasonable repayment structure with a monthly payment that you can afford. These adjustments usually include, but are not limited to, interest rate reductions or setting a fixed rate for an extended amount of time. A loan modification is not the same as a refinance, or debt consolidation. A loan modification can offer homeowners a long-term solution to the rising interest rates and other economic hardships that have made paying the mortgage impossible and the threat of foreclosure impending. One of the most important facts regarding loan modifications for homeowners is that completing the loan modification process will stop foreclosure and allow the homeowner to keep their house. In the past, loan modifications were only allowed in extreme cases of hardship or delinquency, however, due to the current economic conditions many of the previous requirements and stipulations have been lifted, making it much easier to qualify for a loan modification.
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