For the majority of homeowners, their home is their single largest investment. For some of those people, that investment makes up their entire net worth. Therefore, when their home investment is threatened it feels as if their whole world is crashing down around them.
This is particularly true for homeowners who got swindled into a teaser balloon loan where, after 3 or 5 years of regularly steady monthly payments, they suddenly saw their monthly payment amount increase by hundreds of dollars. They were not fully cognizant of the loan terms that they had “agreed to”.
Thankfully, there is a second chance opportunity for many of these swindled homeowners, which can allow them to forestall foreclosure, remain in their home, and decrease their monthly mortgage payment. In mortgage terms, it is called a home loan modification program.
A home loan modification program can help homeowners save their homes because it allows them to restructure their existing mortgage. This loan instrument is not the same as refinancing, which can achieve the same goal. Refinancing often occurs with a completely new loan by a completely different lender. Similarly, it is not a forbearance agreement, which is a simply a short-term reduction of your monthly payment.
On the contrary, a home loan modification program gives a homeowner the ability to renegotiate specific terms on their current loan, while the rest of the loan terms remain the same. Therefore, an individual may be able to change their adjustable interest rate loan into a fixed interest rate loan. This could result in a lower monthly payment, without compromising the other more favorable terms or requiring switching lenders.
Individuals who know that they will not be able to keep up with their currently adjusted monthly mortgage payment will benefit most from a loan modification program. It will allow them to keep their current mortgage without having to face a new mortgage broker and get approved with the necessary credit scores for a new mortgage-refinancing loan. Furthermore, your current lender may be far more willing to offer you a second chance deal, because the likely result of not doing so is a client who defaults on his/her mortgage.