What Are the Benefits of a Loan Modification?

When you obtain a mortgage and begin making payments on your home, the last thing you expect to have happen is to fall behind on your payments. Before you know it, you may be several months behind and wondering if foreclosure will be in your future. Should you not be eligible to refinance, your next best bet will be a loan modification. If you are wondering how this may help you salvage your mortgage and keep your home, here are some facts you need to remember.

Reduce Your Payment

Perhaps most importantly of all, reaching an agreement with your mortgage provider for a loan modification often means you will emerge with a monthly payment that is much more manageable for your budget. Not only will this give you immediate peace of mind, but also position you to hopefully complete your mortgage payments on time.

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Keep Your Home

When you start falling way behind on your mortgage payments, the thought of losing your home can produce an overwhelming level of stress. By discussing loan modifications with your mortgage lender, you will be able to avoid foreclosure and stay in your home. This is especially important to families with children.

Avoid Serious Damage to Your Credit Score

If you allow yourself to suffer a foreclosure, the damage to your credit score will be almost insurmountable. Should this occur, it may not be impossible for you to obtain another mortgage in the future but it will be one that likely has much higher interest rates and thus higher payments. Once you are able to obtain a loan modification, your credit score will suffer only minimal damage, meaning you can still obtain auto loans and other types of financing for major purchases.

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Change the Original Terms

Once your loan is modified, the terms that were associated with your original mortgage are permanently changed. Not only will this ease the financial pressure you have been experiencing, but it will give you a fresh start as you once again start making payments to your lender.

Eliminate Your Delinquency Status

Finally, being approved for a loan modification will instantly eliminate your delinquency status with your lender. This can be important if you are seeking to obtain loans for other big-ticket items, such as a new car. If a credit check is done and you are found to be in delinquent status with your mortgage, the chances of obtaining other types of financing are essentially zero.

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Instead of letting your financial future spiral out of control and see yourself become a victim of foreclosure, talk to your lender immediately to find out if a loan modification is possible.