foreclosure8If you’re behind on your mortgage, or even facing foreclosure, you may want to consider a loan modification. This will change the terms of your mortgage, often catching you up on missed payments and saving your home. The first step in the process is, of course, contacting your lender. However, before you get started, it’s good to know the answers to some common questions about adjusting your mortgage.

First of all, if you’ve accrued any late fees on your mortgage, HUD requires that your lender waives those fees for your loan modification. This is good news for you, as late fees can run into the hundreds, and even thousands of dollars. However, in order to get the modification approved, you’ll have to supply your lender with proof of income and other financial information in order to show that you’re able to make the new payments.

Further, you don’t even have to be currently late on your payments to apply for a modification. All you need to do is show your lender that you’re no longer able to afford the mortgage payments as they currently exist. If you’re falling behind on payments (or about to) due to a divorce, death of a co-borrower, job relocation, illness, or military service, your lender will give you special consideration in the modification approval process, as these circumstances are considered hardships. You’ll need to supply a letter detailing your hardship when you send in your application.

Missed payments can often be worked back into the new loan and spread out over a period of time to help you get back on your feet. The entire purpose of a loan modification is to stop foreclosure and get you current on your mortgage again, so lenders are willing to do what is necessary to make this happen, as long as your requested terms are reasonable.

be aware that your lender will usually require a large up-front payment to get the loan modification process started. However, if you’re in real need and your income qualifies you, that large fee will most likely turn out to be money well spent as you’re given the chance to save your home.

This is the seventh installment in our foreclosure series. Be sure to check back for updates…

Filed under: Foreclosure

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