In the current gloomy economic scenario when foreclosures are on all time high, loan modification is the best option available to home loan borrowers to prevent their home and pay off their loan in full. A modification is a permanent change in terms of the mortgage loan which consists of any or all of following: resetting the interest rate, payment deferment for a particular period of time or readjustment of principle amount. However, the terms of modification may vary from bank to bank. Loan modification in most of the cases, is not just a more viable option but also a cost effective one.
The procedure of a modification is free of cost to the borrower, but the borrower has to fulfill certain conditions before borrower becomes eligible for loan modification. Some common eligibility criterions are as follows:
o Borrower who failed to pay mortgage payment thrice or been delinquent for 90 days.
o Borrower is facing a financial hardship, which can be proved, affecting his capability to pay the mortgages.
o The property is the primary property, which means the property is the main residence of the borrower.
o Borrower has not filed bankruptcy and the date of foreclosure has not been set.
The procedure of the modification can be at times difficult for a borrower filing it for the first time. Borrowers who find themselves lost in the paperwork and technicalities involved, can seek assistance from loan modification companies or Do it yourself modification Kits.
Borrowers who either cannot afford paying the modification companies or want to do it themselves, Do it yourself (DIY) loan modification kits can be of great help concrete-everything. The DIY loan kits consists of tutorials to Do it yourself (DIY) kits is a step by step guide that contain
As the process requires you to consolidate your income and expense statements. Do it yourself kits have tutorials about how to chalk out a monthly budget, how to calculate your debt to income ratio.
Do it yourself kits direct you about how to do the paperwork. They contain sample application forms and hardship letters to help you with the process.
They also contain details regarding negotiating tactics and ways that can help your sail smoothly through the whole process of modification.
However there are certain disadvantages too of buying a DIY modification kit such as:
Some people see no point in “purchasing” DIY kit as most of the information that they furnish is freely available online or through US Department of housing and Urban Development (HUD). This government department also offers free counseling services and required guiding material.
Another major criticism of DIY loan modification kits is that they do not have any real person who can assist you or represent you to the bank. The borrowers will have to do the negotiation with the bank themselves, which at times can be tough nut to crack.
To conclude, weigh your options before choosing to file your modification with the help of a loan modification company or DIY loan modification guide. The use of either type of assistance is heavily dependent on your preference and complexity of the case.