The pandemic and its aftermath put an unprecedented strain on household finances nationwide. If you’re a homeowner facing financial hardship, are overwhelmed by a rising adjustable interest rate, or are upside-down on your home and owe more than your home is worth, you could benefit from a mortgage loan modification.
A mortgage loan modification allows you to make reduced payments or even defer them entirely for a period of time. This can allow you the time and space to get a solid financial footing again without jeopardizing your home. Don’t let circumstances beyond your control take what you’ve spent years working toward. Read on to discover if mortgage loan modification might be the right move for you.
What is a mortgage loan modification?
A mortgage loan modification is essentially a renegotiation of the terms of your loan to make it easier for you to repay. Lenders don’t want to lose money on their investment. As a result, they may be willing to offer more flexible terms of repayment to borrowers who are experiencing financial hardship. This often results in forbearance and a lower monthly payment for borrowers.
The difference between mortgage loan modification and mortgage refinance
A mortgage home loan modification and mortgage refinance are two separate approaches to reducing your monthly payment. With a mortgage loan modification, the actual terms of your loan are modified, but the loan is the same one. With a mortgage refinance, you will obtain an entirely new loan and will have to go through the underwriting and qualification process.
With a refinance, you’ll be “restarting the clock” on your loan and will start over with a new loan pay-off term. You may also face thousands of dollars in origination fees if you decide to refinance. With a loan modification, you can avoid these fees and may only see your existing mortgage converted to a 30 or 40-year term.
How can mortgage loan modification help borrowers?
If you are experiencing financial hardship, a mortgage loan modification can give you time to catch up on missed payments. Lenders are often willing to work with borrowers who can demonstrate their financial need. However, this process can be daunting, especially if you haven’t spoken much with your lender.
A loan modification lawyer can help you reach out to your servicer to get this process started. They can handle all of the paperwork and negotiation on your behalf, allowing you to focus on improving your finances. Loan servicers are often notoriously difficult to deal with and may lose paperwork or miss calls, but a loan modification lawyer can handle this work for you.
Factors to consider before applying for a loan modification
Applying for a mortgage loan modification can be a risky move, so you’ll want to carefully consider its pros and cons before proceeding:
Pros:
- Your monthly payments may be reduced.
- You may face a lower interest rate.
- You can avoid foreclosures if your mortgage loan modification is approved.
Cons:
- A mortgage loan modification application includes a significant amount of paperwork and fees, and may not be the best use of your limited time or resources.
- Your lender may still choose to foreclose, even if you began the mortgage loan modification process.
- You may face a balloon clause, which requires a large payment of thousands of dollars several months into repayment.
- Your mortgage may be extended for 50 or even 60 years.
- You may still lose your home if you can’t make payments with your modified mortgage loan.
How can someone benefit from hiring an attorney to handle their mortgage loan modification?
Dealing with loan servicers can be a frustrating, time-consuming, and expensive process – if you don’t have experience navigating it. A bankruptcy attorney has spent years working meticulously through these processes. They can save you and money, and most importantly, ensure that lenders work with you in good faith and do not take advantage of you.
Unfortunately, even if you are diligent in the application process, a lender may still decide to begin the foreclosure process. Should this occur, your bankruptcy lawyer can also help you file for bankruptcy, which can prevent a foreclosure sale. This can give you leverage over difficult lenders and can bring in a court to oversee your loan modification process.
Vohwinkle Law
If you’re running behind on mortgage payments, it’s important to remember that you have options. At Vohlwinkle Law, we have more than 15 years of experience helping Las Vegas Valley homeowners secure mortgage loan modifications. Contact us today to set up an appointment and we can determine the best course of action to keep you where you belong — in your home.
Have More Questions About Filing For Bankruptcy? Contact Vohwinkel Law!
At Vohwinkel Law, our experienced Las Vegas bankruptcy attorneys are passionate about helping everyday people get out from under the crushing weight of unmanageable debt and getting a fresh start. Unfortunately, there are so many misconceptions about bankruptcy that our initial primary focus is to offer our clients the peace of mind they deserve after so many months, if not years, of feeling financially overwhelmed and afraid.
If you are being harassed by creditors, facing foreclosure, or have had your wages garnished, let us review your financial profile to see if bankruptcy may be a good option for you. Call us at (702) 410-6227 or contact us through our online contact form to schedule a free consultation.
