Opt for mortgage loan modification to get affordable loan terms

If you are finding it hard to make monthly payments towards your mortgage loan, due to a sudden decrease in your income or rise in price in the everyday commodities, you can opt for a mortgage loan modification program.

What is loan modification?

Mortgage loan modification is a program by which you negotiate with your lender to change the existing terms and conditions of your mortgage loan, so that you can repay it comfortably. The new loan rates and terms and conditions will be according to your affordability. Once the lender approves of the modification, it will be sent to the loan processing division and the terms and conditions of your loan will be modified.

The lenders can help you in 4 ways:

* They can extend the loan term
* They can reduce the interest rate
* They can reduce the principal balance
* They can convert your ARM to fixed rate or vice versa

What documents are needed for the program?

Along with other factors, you have to produce a number of documents, as follows:

* Hardship letter
* Your recent salary stubs of last 2 months
* Financial worksheet
* Tax returns of last 2 years
* 3 Recent bank statements
* Mortgage payment statements/coupons
* Property tax statement
* Attorney Retainer Agreement

What are the eligibility criteria for loan modification?

To qualify for a loan modification program, you have to fulfill the following criteria:

* Your loan must be secured by Freddie Mac or Fannie Mae
* The amount you owed on 1st mortgage should not be more than $729,750
* The first mortgage should have been obtained before January 1st 2009.
* The home should be your primary residence.
* You have to furnish documents as an evidence that you are facing financial hardship

What are the benefits of loan modification?

The benefits of modifying your loan terms and conditions are:

* The loan modification program will not have any adverse effect on your credit score
* There will be no negative tax consequences
* There will be no fees towards closing costs, origination process, etc.
* You do not have to refinance
* Your home equity will be maintained
* Only a flat fee is charged for the services offered.

If you opt for refinancing, you will have to pay extra amount towards the new loan origination process, closing costs and other charges. So, instead of refinancing, you can opt for a mortgage loan modification program to save money and pay off the loan as per your afford-ability.