For homeowners facing foreclosure, odds are that you have considered refinancing. However, refinancing a home loan is tough once you are in default, and the bad credit you have accumulated will probably prevent you from even qualifying. Now though, home loan modification can be used as an option to avoid foreclosure. As a matter of fact, if you are in foreclosure, a loan modification is even easier to get.

Perhaps the biggest advantage to a mortgage modification is the fact that once it begins, any foreclosures are instantly halted. Once you begin, the process includes extensive income verification to truly figure out what is an affordable payment. Generally, home loans that are modified are kept below 31% of a homeowners gross monthly income. Also, in the process you will need to write, and include a letter stating your financial hardships. The purpose of the letter is to convince a potential mortgage lender or bank that even though you had problems with your home loan before, if you get help you can, will, and want to save your home. Let the lender or bank know how much saving your home means to you.

Of all the benefits a loan modification can provide, it will not lower the balance on your home loan. All late, missed, and past due money owed will be rolled into the new home loan. Typically though all late fees and penalties will be waived, which is a big relief to struggling homeowners. When the process of modification is finished with, your home loan status will be marked as current, and you basically get a fresh start. This can also dramatically increase your credit rating, which will help in the long term.

As bad as it may seem, homeowners who are facing or in foreclosure will actually benefit from that when they apply for a home loan modification. A loan modification requires that the homeowner be at least 3 months behind on their payments. While it is not a requirement that you are behind on your loan, it is easier to get approved when you are.

Do not let this chance pass you by. Save your home, or a lot of money by getting a home loan modification.

-M Petrone

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