In today’s hard times, many people would consider turning to modifying their home loans or mortgages. What is this and how can it help the person availing of such loan modification? This kind of service is offered by lawyers all over the country, even in Long Island, New York. A mortgage modification is when the bank agrees to an alteration in the terms of one’s existing mortgage.
The reason for a Long Island loan modification is to aid a struggling homeowner in affording his or her mortgage. In the modification, the usual term alterations are the reduction of monthly payment and interest rate, past due amounts recapitalization, extension of the loan’s term, waiver of late fees, and, in certain cases, principal forgiveness or deferral.
It is relatively easy to qualify for a mortgage modification and the procedure is open to any individual struggling to pay their current loan. The Long Island loan modification depends on various requirements. Thus, even if an individual passes the initial review, it does not always mean the person’s modification application will be approved.
Normally, the lender would determine what has led the homeowner to default on the mortgage, the general ability to offer an affordable loan, and how the person’s finances have changed. In practice, a mortgage modification application may not be granted for even simple variations from the factors the lender is seeking. Depending on a person’s situation, there is no exact way to determine if the lender will grant a decision as it can be based on various factors. In availing for a Long Island loan modification or alteration, a lot of people would have various concerns before they embark on having their mortgages changed.
Some of the concerns include credit rating, lack of equity, or even low income. Fortunately, a mortgage modification is not credit-based and banks or lenders always seek to make a good loan from a bad loan. In applying for a mortgage modification, it does not matter if the applicant does not have any equity. There are banks that do principal reductions/deferrals. It may mean that banks can discount entire amount of the loan to one’s home’s current value. There are also lenders that can also work with an applicant having a low income. However, one may need to show the lender that the entire household is capable of affording a new payment scheme. This is done during the Pre-Qualification stage when the process is initiated.
In a Long Island loan modification or alteration, a person should expect some new terms on their agreement as lenders are always changing their loan modification guidelines. Normally, a bank will alter one’s loan and make it affordable for the borrower to continue payment. Terms that may be included are payment reschedule, lower interest rate, longer terms, reduction of the principal amount, or any changes that will enable the loan to be performing.
One good thing about modifying loans is that the homeowner gets to save a considerable amount of money. Depending on the amount, one can save hundreds of dollars monthly and a loan is normally for 30 years. For instance, a $500 monthly savings equates to $150,000 over the loan’s duration.
Foreclosure is not always a pleasant process and nobody wants to be stuck in this situation. Once a homeowner’s Long Island loan modification application has been approved, usually after three to six months, it is the homeowner’s obligation to make timely payments. In order to avoid such a pitfall and if a homeowner wants to keep his or her home while seeking reduced monthly payments, he or she must consult with the necessary professionals in order to start the process of modifying home mortgages.