3 Steps in which a loan modification process works
There are many homeowners who are suffering from financial distress and are in need of a loan modification. As a result they may be finding themselves in a situation where it is difficult for them to pay off their mortgage loan. If this is the case, there is no reason to panic as the home loan modification process is carried out in three simple steps.
If you're not aware of the process of loan modification, read on to know about them.
1. The borrower has to request the lender for a modification
Loan modifications for troubled homeowners are a best way of lowering the interest rates and monthly payments without going through the trouble of a total refinance. Not all mortgage companies offer a loan modification to borrowers and those that do, do it for a certain amount of fee. Mortgage loan modifications have become increasingly popular as it gives the lenders an opportunity to provide the borrowers with an option of keeping their home and not falling into foreclosure. In order to get a loan modification done, you need to prove your financial hardship to the lender so that he believes your financial condition. Modifications are usually done to lower the interest rates and the monthly payments. Lenders may suggest a loan modification to troubled homeowners but more often than not, it is the borrowers who initiate this process of modifying their home loan in order to pay it off.
2. The lender will consider your request
Most mortgage lenders do not automatically approve the request of a home loan modification. Most lenders have got stringent guidelines regarding the approval or denial of a home loan modification even if the homeowner faces the risk of a foreclosure. You must always keep in mind that these programs were originally made to assist homeowners in avoiding the fees associated with refinancing. Every lender will set up their own standards for which mortgage loan modifications will be approved and which requests are to be denied.
3. The loan modification request is either approved or denied
After the loan company decides whether or not to approve or deny the request, the borrower is notified of this decision. The borrowers whose requests have been denied are told the reason of the denial. If the loan modification process is approved, it is sent through the loan servicing department and the loan is immediately modified. Modifications can take a few payment periods before they go into effect, so it's important for the borrowers to go on making payments as per schedule. Homeowners who apply for a home loan modification tend to get a bit annoyed when they fail to get any service after applying for a loan modification. Thus it is recommended to have patience until the entire loan modification process is completed and your request is approved.
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