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Is Loan Modification Right For You?

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Is Loan Modification Right For You?

There are several loan modification options that your lender might offer you. During a loan modification changes to your current loan agreement are made, and your payments get more affordable, so that you do not default on your loan. There are several reasons why banks offer loan modification options to their clients. For instance, it is easier to work with you than to go after you. If you stop making payments, the bank will attempt to repossess the property such as a home foreclosure, try to collect through wage garnishment, give up hope and accept the loss, or have you declare bankruptcy and receive little or nothing. Either way your credit will suffer. However, there are other options other than losing your home.

Banks have different criteria for approving modification requests, so there is no way to know ahead of time if you will qualify. The only way to find out is to ask. To get a loan modification you normally have to contact the lender. Begin by calling the lender and letting them know about your current financial situation and hardship in making your scheduled monthly payments. Also make sure to inquire about any options available to you.

Banks have the ability to make changes to the current terms of your loan to make the payments more affordable for you. The changes approved may be permanent or temporary. As a result, the end outcome is a more manageable monthly payment to allow you to get back on your feet.

Keep in mind that with lower monthly payments, you may end paying more in interest over the years. If the loan modification will keep you current with the monthly payments, it may be worth the cost. However, make sure you know what it will cost you and you are certain the loan modification is your best option.