It’s possible that your mortgage payment will be lower or your house may be foreclosed. If you’re having trouble making mortgage payments, it’s worth exploring the possibility of a loan modification.
A home loan modification might involve extending the terms of your loan, lowering your interest rate, or switching from an adjustable-rate mortgage to a fixed rate.
A mortgage modification is a change in the terms of an existing mortgage that lenders make.
A modification is usually made because the borrower is unable to pay the original loan that was caused by hardship. Some individuals may be eligible for government aid in loan modification.
Six things nobody tells you about loan modification and foreclosure
- The most effective loan modification procedures are handled by an attorney or a settlement business.
- Modifying a mortgage isn’t nearly as expensive to the lender as default or foreclosure.
- Mortgage lenders must make reasonable efforts to communicate with late payers.
- The loan company wants you to remain in your house just as much as you do.
- Modification may harm your credit score, but not as much as a foreclosure would.
- The mortgage company needs to assign someone who can answer the borrower’s questions and help them with the available loss mitigation options.
Ten good ideas to get approved for a loan modification in Michigan (and avoid foreclosure!)
- Check out the Michigan Homeowner Assistance Fund (MIHAF), which may provide you with up to USD 25,000 to assist you to pay late mortgage/housing payments, such as property tax and insurance escrow shortages. With this help, getting a modification may become easier.
- You must currently be living in and using the property as your primary residence to obtain a loan modification. Make sure your lender knows this and you can demonstrate it easily.
- Keep your receipts well-organized, because you might need them to show an increase in your household expenses, such as:
- increase in household size
- inadequate medical insurance
- costs to reconnect utility services directly related to coronavirus pandemic
- medical expenses
- Propose a repayment plan that includes your regular payments over an extended time, as well as your past-due payments. You’ll save time by not having to pay a lump sum if you move your payments over.
- If you can, choose to reinstate your loan. This will let you pay off the total amount you owe in one payment by a specific date. A reinstatement is easier to get approved.
- If you have been subjected to racial or ethnic prejudice or cultural bias in American society, there’s a good chance that you are a socially disadvantaged individual. This is out of your hands, such as poor command of the English language. There are special programs that can assist you in this case. Contact your lawyer for them.
- Check that your home is not in any of these categories:
- A vacant lot without a dwelling
- An abandoned house
- A 2nd home
- An investment property
- A property where the owner has received Emergency Rental Assistance Funds
- Document your income through recent tax returns, W2 forms, 1099 forms, and/or pay stubs. You’ll also need to include an estimate of any other income you have coming in, such as:
- spousal support payments
- alimony payments
- child support payments
- disability benefits
- pension benefits
- social security benefits
- Insurance verification is required. You’ll need evidence of insurance to give to the lender and your counselor.
- Keep good records of everything related to the loan modification. Write down the conversations you have, the names of the people and organizations you spoke with, their phone numbers, when you spoke with them, and what was discussed. Make copies of all communications exchanged during the procedure.
Trial mortgage modification
It’s not uncommon for a loan modification to take days, weeks, or even months. Even after your lender accepts your application for modification, the process isn’t finished.
Your lender may also request that you go through a trial modification period. This trial period allows your lender to see if you’re capable of making the new mortgage payment.
How long is the trial loan modification?
If you obtained your loan modification through the government’s HAMP program, you must complete this trial period. The typical trial modification duration is 90 days.
What happens if you miss the trial mortgage modification?
If you miss payments during the trial period, your lender has the option to withdraw its previous approval of your modification application.
In conclusion, remember that you’re having trouble making your mortgage payments, don’t hesitate to reach out for help. There are many agencies and resources available to assist you. Contact Babi Legal Group immediately to see how we can assist you today!