8 Benefits of Loan Modification You Should Know

8 Benefits of loan modification you should know

Loan modification helps you to get the terms of the original mortgage contract modified. It is a process which alters the terms and conditions of the mortgage loan contract that was decided upon between you and your creditor. With the help of this process you may change your interest rate, payment period or monthly payment with the approval of your creditor. Loan modification is handled by the Loss Mitigation Department. As you have found out now what is loan modification, you must also know about its benefits. Before getting the benefits of green plain loans, the study of the entire contract should be done with intelligence. If there is requirement of any modification, then it should be discussed at to get the work done with less effort. Several benefits are provided to the person which are stated below- 

Benefits of loan modification

Loan modification is plan which helps to rescue the housing market. Apart from knowing what is loan modification, here are some benefits you should know about it.

Get late charges waived off –

According to mortgagee letter 2008-21, you may get your late charges waived off by your creditor, at the time of loan modification.       

Convert ARM to fixed rate –

Loan modification may allow you to convert adjustable rate mortgage (ARM) to fixed rate. When you find out that your current rate of interest rate is higher than the fixed rate of the market, you may convert your ARM to fixed rate. You may do this with the help of loan modification.     

  Affordable payments –

With the help of loan modification you may get affordable payments. Loan modification may help you get reduced interest rate, in order to provide you with an affordable payment. 

 Longer payment period –

Loan modification may also allow you to get an extended payment period if your creditor agrees to it.   

 Avoid foreclosure –

You may avoid foreclosure and short sale with the loan modification plan.       

Reduction of principal balance –

Principal balance is the total amount you need to pay to your creditor as agreed upon in your loan agreement. With the help of loan modification you may also alter this amount as agreed upon among you and your creditor. Try to negotiate with your creditor and he may lower your principal balance.     

 It prevents home values from falling –

A foreclosure may affect the home values of your neighborhood. Foreclosures make prices of your neighborhood homes fall. Thus, loan modification helps you not only to keep your home but also does not affect your home value or your community’s value.       

Preserves credit score –

Loan modification helps you to preserve your credit score. Foreclosure may reduce your credit scores and it may stay on your credit report for 7 long years from the date of foreclosure sale.

If you need loan you may take help of companies who may help you with your loan modification. Find out about your company from the local credit union or check with the Better Business Bureau. But, it will be better if you do it on your own.

Kris is our in-house writer with a lot of experience under her belt. She loves to provide her insight about the market trends and her predictions about market trends are often on point.