While loan modifications my not be for everyone, they certainly are worth some consideration if you are facing the possibility of foreclosure. However there are some factors you will need to take into consideration.
Is a mortgage modification for me?
While a modification may make your mortgage payments more affordable by reducing the interest rate or extending the length of the loan, it may not be for you if your current situation is such that even adjusted payments will not make your home affordable to you now.
What does a loan modification do?
A loan modification attempts to make your mortgage more affordable by changing your required payments. It helps prevent a foreclosure.
What does a loan modification not do?
A loan modification does not eliminate your debt. Rather it extends it by lengthening the terms of your loan. You will still be responsible for paying your financial obligation.
How do I know if a mortgage modification will help me?
Evaluate your current situation. What can you afford under your current circumstances? Is your situation one that is only temporary? Could you realistically afford your mortgage under lower monthly payment terms?
Will a loan modification stop foreclosure?
This depends on your individual ability to make your payments. If you cannot afford to make the lowered payments than you will still be forced to face foreclosure.
Should I declare bankruptcy?
Naturally you want to avoid this if at all possible, but unfortunately there are situations where this may be the only realistic option.
Will bankruptcy stop foreclosure?
If you are able to file a chapter 13 bankruptcy then you will be able to save your home. Under chapter 13 mortgage companies are forced to give you a loan modification within your budget. However if your situation is such that even this is not enough, you may be forced to file chapter 7. Under a chapter 7 bankruptcy everything is liquidated. Obviously this is not the best option.
What steps should I take to prevent foreclosure?
Your personal situation will be unique to you and only you and a consultant can answer this question. You have started to do the right thing by simply reading this article; it shows that you are admitting there is a problem. This is the hardest step. Your next step will be to consult your attorney or an agency that specializes in negotiating mortgage modifications.
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