If you are struggling to make your mortgage payments, you are far from alone. You may be considering seeking a loan modification. The Consumer Financial Protection Bureau (CFPB) describes a loan modification as “a change in your loan terms.” In practice, loan modifications can take many different forms—from waiving penalties & fees to extending the period of repayment.
Loan modifications can help resolve mortgage problems. It could be the thing that makes your payments affordable. That being said, a loan modification is not the best path forward in every case. There are both advantages and disadvantages. In this article, our Las Vegas loan modification lawyer discusses the pros and cons of getting a loan modification for your mortgage.
Mortgage Loan Modification: The Pros
There are few things more stressful than falling behind on your mortgage payments. A loan modification offers a potential solution to Nevada homeowners who are struggling to make their current payments. Here are three pros to getting a mortgage loan modification in Las Vegas:
Pro #1-You May Be Able to Get a Lower Monthly Payment: First and foremost, the primary benefit of a mortgage loan modification is that you may be able to qualify for a lower, more affordable monthly payment. This is achieved in three basic ways: 1) Repayment period may be extended, 2) The interest rate may be reduced, and/or 3) Certain penalties and fees may be forgiven outright. With a mortgage loan modification, you could be in a better position to make your full payments each month. Your most pressing financial problem may be solved.
Pro #2-Delinquency Status Will Be Resolved: Another important benefit of a mortgage loan modification is that it will resolve an outstanding delinquency status. Once the lender/mortgage company accepts a final modification agreement, you will no longer be in delinquency status. In other words, if you are two months behind on your mortgage, a modification can get you back in good standing. The sooner you get started with the mortgage modification process, the easier it will be to find a solution that works for you and your family.
Pro #3-A Loan Modification Can Buy You Time: For financially distressed homeowners, losing their home to foreclosure is one of the biggest concerns. A loan modification can help to buy you some more time against potential foreclosure proceedings. In some certain cases, this additional time can be the difference between saving your home and losing your home.
Mortgage Loan Modification: The Cons
A mortgage loan modification should not be viewed as a panacea. There are some downsides—and it may not be the best option for your specific financial circumstances. Here are three potential cons associated with mortgage loan modification in Las Vegas:
Con #1-It is Likely to Cost You More Money in the Long Run: In general, mortgage loan modifications involve adding cost to the end of the mortgage. You may even be required to extend your mortgage from a 30-year loan to a 40-year loan. While this can be a necessary step to resolving financial problems, it comes with a cost. A mortgage modification is likely to cost you more money over the life of the loan.
Con #2-Modification Negotiations Do Not Stop the Foreclosure Process: Are you already facing foreclosure action? If so, it is important to understand that entering mortgage loan modification negotiations will not automatically stop that process. The foreclosure can continue even if you are trying to work out a modification. Unlike filing for personal bankruptcy protection, there is no automatic stay.
Con #3-A Loan Modification May Be Insufficient to Fix Your Problem: Finally, another potential con associated with a mortgage loan modification is that they can sometimes be small band-aids when a much more comprehensive debt relief solution is required. A mortgage modification is generally not the best approach unless it actually resolves your financial issues. A modification that simply delays foreclosure by a few months is not good enough.
Schedule a Confidential Consultation With a Las Vegas Loan Modification Lawyer
At Vohwinkel Law, our Las Vegas debt relief attorney has deep experience handling complex loan modifications. Our firm is focused on working to ensure that clients achieve financial peace and stability. If you have any questions about your options for getting out of debt, we can help. Call us now or contact us through our website for a fully confidential consultation. With an office in Las Vegas, we help people and families obtain loan modifications throughout Clark County.