What is Loan Modification?

When you take out a home mortgage or loan, you and the bank agree upon how much money you will borrow and how long you will have to repay it. If you or the bank asks to change the original agreement for any reason it is called a loan modification. The most common reason for modifying the loan’s terms is when the borrower is having trouble making payments and is becoming at risk for defaulting on the loan. Rates of foreclosures in Miami are among the highest in the nation and applying for loan modifications in Miami may allow you to keep your home and keep up with your monthly payments. There are multiple modifications that may help you; it simply depends upon your situation.

Generally your bank will not offer to modify the terms of your loan; you will need to ask them. The best time to ask is when you first begin missing payments, and long before the foreclosure process begins. If you have missed a regular payment, you should contact your mortgage company to see if a loan modification can help. Once you are several months behind and late fees are quickly piling up, it may be too late. Mortgage companies make money from loaning you money and only make a profit if you repay it with interest. If you do not pay off your loan and file for bankruptcy or put your home into short sale, the bank loses the money it loaned you. Since they do not want to lose money, it is in your bank’s best interest to work with you to ensure you can pay the loan back in full. Banks want you to pay them back; do not be afraid to ask for a loan modification.

Generally, loan modification refers to any change in the original terms of the loan. There are a couple more common modification types. If you are several payments late, the bank may allow you to skip a few months worth of payments and add extra payments to the end of the loan period. This can help you get back to date and avoid hefty late fees. If your loan payments are too much for you to make, the bank might lower your interest rate making monthly payments more affordable. If you lost a high paying job and had to take a lower salary, the bank might allow you to pay off the loan over a longer period of time. This will make the monthly payments much smaller, but you will end up paying more interest. Any modification must be approved by your bank.

Florida loan modifications are a great tool that can allow you to keep your home and protect your credit score. If making your monthly loan payments is impossible or becoming hard for any reason, call your bank or contact Miami foreclosure attorneys to determine what option is best for you and your family.