Mortgage Modification
So what is mortgage modification? In layman’s terms, mortgage modification is negotiating terms of your mortgage with your lender for the purposes of keeping you in your home.
Why would your bank change the terms of your mortgage? Well it’s not because the bank is altruistic, but because the bank would rather get part of something than all of nothing. For a bank to modify the terms of your mortgage, they have to be convinced that they are in danger of losing a lot of money.
There are four key aspects of a mortgage that can be adjusted in a mortgage modification application.
Cure Arrears: In layman’s terms, you ask your lender to put the past due amount on your mortgage to the back of your mortgage so you can start making your normal payment again. This is a good option for someone who lost their job but has found new employment and wants to get back on track.
Interest Rate Reduction: This is where you ask your lender to lower the interest rate you pay each month so your payment is lowered or more money can be applied to your principle. For example, on a $200,000 mortgage at a 9% interest rate, the first $1500 paid goes toward the interest for that month alone. If you get your rate lowered even 1/2 a point, that will save you nearly $25,000 over the life of the loan. Individuals can sometimes get a reduction on their own, but an attorney will likely get you a better deal.
Fix Your Interest Rate: One of the major factors in the sub-prime mess has been variable interest rates. Borrowers have been living on a budget based on a particular monthly mortgage payment and then they get hit with the news that their mortgage is adjusting and it destroys their budget. Getting out of an adjustable rate mortgage can restore certainty to your monthly mortgage payment. I have rarely seen an individual get this on their own, but it can’t hurt to ask.
Principle Reduction: Some lenders are agreeing to principle reductions on their loans. While it is rare, there are times where a lender would prefer to lower the principle on your mortgage rather than foreclose on the home. I am an experienced mortgage modification attorney, and I ask for this on nearly every modification case, but I rarely get it. I have never seen a person who represented themselves get this deal, but again it can’t hurt to ask.
The world of mortgage modification is changing rapidly and it is difficult to keep pace, you need a competent professional to get you your best deal. If you are ready to hire an attorney who has his finger on the pulse of the mortgage modification world and can get you the best deal possible, call me at 484-661-2891 or email me at jim@padebt911.com to schedule your free, no obligation consultation.
