Loan Modifications

In my last blog, I talked a little about options for families like yours who find themselves in default (behind on payments) on their mortgages and facing a Michigan foreclosure. I commented specifically on workout plans; now I’d like to talk a little more about loan modifications.

Many different lenders offer many different options for you when you are facing a financial hardship.…too many, in fact, to cover in just a blog. Basically a loan modification is just that – it is a plan to modify or change the terms of your original mortgage to allow you to stay in your house.

Some modification options may include reducing the interest rate (or maybe simply converting a variable rate to a fixed rate), extending the life of the loan (maybe from 20 to 30 years), or reducing the principal balance (although these are very rare).

Like workout plans, these options may be helpful to you if you’ve experienced a temporary hardship. It’s always a good idea to speak with your lender to determine whether a loan modification will be a good fit for you. Remember, 80% of families who complete a modification are back in default 6 months later. So be sure that any modification you agree to is a permanent solution.

If, however, neither a workout plan or a loan modification seem to be a possible solution for your situation, selling your house via short sale may be your best option. For more information on short sales, call Emily “Mom” Danger today.

Melissa

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