Loan modification is by no way easy. The lender is under no pressure to agree to your conditions. It all depends on how good you are at negotiating and how well you convince your lender about your inability to repay the loan as per the current terms.
Loan modification involves certain rules that are to be followed. Ignoring these rules can be a huge mistake that cannot be corrected. If you want things to work your way, you will have to play by the rules of the lenders. Here are a few Dos and Don’ts that you will have to keep in mind before applying for a loan modification:
Work with an expert
Working with a qualified person who is experienced in loan modifications can prove to be really helpful when getting your loan modified. Such a person will help you in the preparation of all your documentation, submission of the same in time and in the negotiation of all the terms pertaining to loan modification.
It is quite easy to find such experts anywhere in the USA. In fact some of them might even contact you directly by purchasing your details through loan modification leads.
Explore your options
A mortgage modification is often the best option if you don’t want to lose your home because of a few missed monthly mortgage payments. However, there are a few more options you can consider if you want to avoid a foreclosure. For instance, there is bankruptcy that you can think of. However, this might affect your credit score quite badly.
Another option to avoid foreclosure is a short sale. If done properly, you can be free of your debt by selling your home at a price that is lesser than its actual market value. A short sale does make you lose your home; but it may not damage your credit as bad as a foreclosure or bankruptcy would.
Keep records and copies of documentation
Any calls that you make to your lender with regard to loan modification needs to be recorded if you wish to achieve a greater power of negotiation. Also make sure you maintain a copy of every form that you fill up and the letters or emails that you may have sent or received from your lender. Any document that you submit should be copied so that the lender doesn’t get away by saying he didn’t receive your documents. This includes your hardship letter, proof of income and tax authorization form.
Have your backup plan ready
No matter what documents you submit and how you negotiate with your lender, there is no guarantee that your lender will agree to modify your loan. Your lender might be too hard to work with or maybe you have missed out on a lot of monthly mortgage payments. Whatever may be the reason, it is always wiser to have a backup plan ready. This will help you take the necessary action promptly if things don’t go as you expect.
Don’t wait too long
Your lender might apply for a foreclosure once you miss out on three or four of your monthly mortgage payments. Once the process is initiated, you don’t have much time to save your home. Whatever it is that you decide to do, it needs to be done as early as possible. The longer you wait, the tougher it will get for you. Ignoring the situation is not exactly the best option.
Don’t lie about your situation
Loan modification works on the basis of the trust that you develop with your lender. Therefore, you need to be as honest as possible with your financial situation and the documents that you submit to prove the same.
Don’t automatically assume that you are getting the best deal
The process of loan modification can be quite intimidating. However, it is not good to assume that you are getting the best deal just to get away from the process. Getting your loan modified would mean making your monthly mortgage payments affordable. However, you will still have to make them regularly. Make sure things work out for you before signing any paper pertaining to loan modification.
Before you agree to hire the services of a loan modification counselor who contacts you via loan modification leads, make sure you gather as much information as possible and do your homework thoroughly. You should know what you are getting into before you actually jump into it.