Can A Loan Modification Help You Save Your House? 

Share There are many reasons why people apply for a loan modification through their lender. The main purpose of the modification is to restructure the loan, generally bringing all past due payments current.

Many people find that this is an option to get out of foreclosure or to avoid a bankruptcy.

If you are having trouble catching up your monthly payments because you do not qualify for or are unable to keep up with a payment plan set by the collection department of your mortgage company, then a modification may be the right option for you.

You want to know a few key facts though as you move forward with the process of the loan modification.

One big mistake is thinking that your mortgage payments will freeze and your account will not go into foreclosure because you applied for a mod or because the modification team is working on approving it for you.

Video sidenote: here are some tips on applying a loan mod:

Your account will continue to run past due and the payments will continue to pile up until the mod is approved and the due date on your account is rolled forward.

This means that your mortgage account could enter into a foreclosure status while you are trying to apply for your modification. Because of this, it is important to apply for your modification as quickly as possible.

The loan modification department will ask that you fill out some paperwork and possibly provide them with additional documentation. Do not delay with any of this because it will tie you up from getting the mod approved.

The faster you move in supplying the mortgage company with everything that they are asking for, the sooner you will be in the clear.

Also, do not be surprised if the mortgage company has their collection department continue to call you.

If you can work out a payment arrangement with them while you are working on getting the loan modification approved, go for it. This will not hurt your application process and it will act as a nice safety net should the modification be denied.

Now, make sure that you are only taking the loan modification if you really need it. Many lenders have a limit on the number of modifications that they will give any one account.

This is to make sure that they are eventually getting paid the money that they are owed.

There are just too many people out there who would do a mod every single year if they could.

This would mean that the bank would go most of the year without any money from the homeowner. Generally, the limit is two modifications for the life of the loan, whether that is ten, fifteen or thirty years.

If the modification is something that is best for you at the current moment then go for it. Just make sure that you have a backup plan in place in case it falls through. You do not want to end up in foreclosure.

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