For those that are faced with the reality of debt and a mortgage that they are unable to pay off, a loan modification can be a significant benefit that can provide much needed assistance. Many home owners are finding it near impossible to meet the payments of their mortgage and the decline of real estate property and reduction in jobs over the past few years has put many people in a far worse position than when they originally purchased their home.
A loan modification is worked out with lenders to determine if they will allow for a change to be made to payments that makes it more possible for the homeowner to meet them. It is important to remember that lenders are not required under the law to provide a loan modification and it is up to their judgment to decide if they wish to or not. Many of them may choose to because they are given incentives by the government and they would rather receive some payment instead of none. Before moving forward with a modification, decide if it is the right option for you and if it has the potential to improve the situation.
Finding Qualified Assistance
Remember that since the modification takes place through the lender, you will need to be working with them. Having an attorney can be incredibly beneficial since they will understand how to go about developing a new plan. Make sure you work with someone that is qualified and has a successful track record. There are many companies that have turned up since the decline of the economy, making large promises to those with financial issues that they can get them out of it. Many of these companies have no basis and only take clients’ money, rather than finding a solution in their case.
A modification is based off the fact of hardship and you want to make a clear point that you are facing a valid hardship that has made it increasingly difficult to meet the payments. In the past, loan modifications were for those that had already defaulted on their payments. Today more lenders are looking to work out a solution before it gets to this point. This means that you do not have to wait and if you believe that you will be unable to meet the payments in the near future, then it is advised that you begin looking in to this option before it is too late.
Paying Attention to Payment Plans
When developing a payment plan it is not only the monthly payment that matters. The whole terms should be reviewed to ensure that it will be as helpful as possible, rather than leaving you in a worse off position. It is important to take into account if the interest rate will be changing and by how much. Sometimes the initial interest can sound great but in the fine print it will be increasing significantly after a specified period of time. Know what the new principal is so that you can be as well educated on the status of your loan as possible. A loan modification will be for a period of time that is typically between three to five years. Find out what your payments will change to after the time of the modification has ended.
One thing that is very important to look out for is known as a balloon payment. This is the term used when after a few years of modified payments there is a substantially larger payment. This is often one that is not realistic for the homeowner to manage. A loan modification can be used to push off the foreclosure of a home but in some cases the terms that are set in the modification will only delay the process, rather than preventing it all together if the individual is unable to pay the increased cost down the line. The faults with a modification made it so that the repercussions were only delayed for some. The government is now stepping in with a program that seeks to make it more affordable.
Debt Relief Lawyer in California
In order for a loan modification to have a greater chance of being successful, it needs to be handled right from the beginning. This is one of the reasons why you should work with a skilled a California debt relief lawyer from the Law Office of J. Arthur Roberts. We have more than 20 years of experience aiding clients to find a solution in their debt matters.