Allstar Realty Inc – 8751 W Broward Blvd Suite 304 – Plantation, FL. 33324
Serving South East Florida, Palm Beach, Broward and Miami Dade County.
Fort Lauderdale, Hollywood, Boca Raton, Miami, Hialeah, Miramar, Pembroke Pines,
Davie, Coral Gables, Weston, Southwest Ranches, Cooper City, Lauderdale by the Sea,
Pompano Beach, Coral Springs, Parkland, Miami Lakes, Kendall.
What Is A Loan Modification Program? How can it help me?
Every day in the “new economy” thousands of homeowners are exploring their options when it comes to saving their homes.
One of those options is a loan modification program.
There are different types of loan modification programs available. If you’re considering a modification make sure you choose the program that will be the most beneficial to you.
What Is A ?
When a homeowner over time can no longer make their monthly mortgage payments…he or she may contact their lender to request a “modification” of their current loan. This modification may or may not result in lower payments for the homeowner depending on the type of modification one chooses.
There are different loan modification programs to fit different situations
Let’s take a look at each one.
Term Extension Loan Modification Program
With this kind of loan modification, you are asking for “more time” to repay your loan. With a longer term to pay…you would also have a lower monthly payment. The length of the extension cannot be any longer than your current payment term. So if you had 15 years to pay off your mortgage..you would be allowed no more than an additional 15 years.
Reduced Interest Rate Modification
With this kind of loan modification program, the lender will reduce the interest rate for the remainder of your loan. This will automatically result in a lower monthly payment. Remember this will only reduce the interest not the principle on your loan.
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Step Rate
Unlike the reduced interest program which extends the life of your loan…the step rate loan begins with a reduced interest rate and gradually returns to your current rate over a short period of time. So if you are certain that you will be able to get back on your feet financially within a few years…this may be the right program for you. But it’s important to really take a hard look at your finances before taking this route.
The rate reduction is only good for a few years. After that…you will be back to making the same monthly payments you had before the step rate loan modification.
Straight Capitalization Loan Modification
This program is probably the least beneficial to most homeowners seeking to keep their homes out of foreclosure. Why? Because with this program you will have a higher monthly payment.
All overdue interest is added to your current principal balance. You now have a “modified balance” that will be ” amortized.”
An amortized loan means you will have to make both principal and interest payments. As opposed to an “interest only payment” loan for example. Again this is where having a clear picture of your finances is crucial.
Loan Modification Program-Combination
Since every homeowner’s situation can and is very different…there is always the possibility that none of the above loan modification programs will be exactly what you need.
It is a common practice among lenders to “combine” modifications in order to come up with something that will work for the homeowner’s situation.
For example, a lender may combine the reduced rate and term extension modification programs. This gives the home owner lower monthly payments and more time to pay off the loan.
Take Your Time And Consider Each Option
Any loan modification program has a two fold goal.
First, to help the homeowner by giving them options that will allow them to still make monthly payments, but at an amount they can comfortably afford.
Second, the lender whenever possible would rather modify a loan and work with the homeowner. The expense and time it takes to go through the foreclosure process makes modifying the loan more advantageous and profitable in the long term.
So before you choose a loan modification program, look over your current finances with a fine tooth comb. If one loan modification doesn’t quite offer what you need…negotiate the terms with your lender. Try to get your lender to combine the programs.
Remember, in every modification we’ve discussed you must make your payments on time. Failure to do so could leave you in danger of foreclosure.
Finally, if you decide to apply for any loan modification program…don’t wait too long. If you’re in financial trouble, the sooner you contact your lender…the better.
To learn , just visit .
Allstar Realty Inc – 8751 W Broward Blvd Suite 304 – Plantation, FL. 33324
Serving South East Florida, Palm Beach, Broward and Miami Dade County.
Fort Lauderdale, Hollywood, Boca Raton, Miami, Hialeah, Miramar, Pembroke Pines,
Davie, Coral Gables, Weston, Southwest Ranches, Cooper City, Lauderdale by the Sea,
Pompano Beach, Coral Springs, Parkland, Miami Lakes, Kendall.
