Loan modifications on your home can be complex and confusing. Below are some commonly asked questions when considering a home loan modification. A loan modification is a permanent change in one or more of the terms of a borrower’s loan, allowing the loan to be reinstated and resulting in a payment the borrower can afford.
1. How does a borrower become eligible for a loan modification?
A borrower can become eligible for a loan modification in a number of different ways. Lenders often use a specific criterion when considering a modification in Florida. Typically, the lenders use an analysis, mostly based on a borrower’s financial status, when determining a borrower’s eligibility for a modification. The lenders consider things such as looking at the mortgagor’s surplus income, if the mortgagor(s) experienced a verifiable loss of income, or increase in living expenses. These companies also look to see if the mortgagor has received a loan modification or FHA-HAMP in the last 24-month period. In addition to that, the lenders also look to see if the mortgagor has successfully completed a 3-month trial payment plan based on a reduced mortgage payment amount. These are a few factors lenders consider.
2. Do I have to be behind on payments to get a loan modified?
No. You don’t have to be behind to qualify for a modification.
3. What constitutes a “Hardship Situation” for me to get a modification?
This can be a situation like the death of a spouse, a divorce, loss of employment, an extreme financial difficulty, illness, or injury.
4. How long does a Loan Modification take?
The time frame for a modification can vary. Usually, this process takes anywhere from 2 weeks to 4 months.
5. How long do I have to start a loan modification?
Usually, the sooner the better. Once foreclosure starts, a modification is no longer an option.
6. Can a loan modification help avoid foreclosure?
Absolutely! You should consider a loan modification before entering into the foreclosure process. Mortgage modifications have been more and more prominent in the recent years.
7. Can previous missed payments be included in a modification?
Yes. It is good to show a willingness to get caught up with your current mortgage.
8. Can late payments be included in a loan modification?
Unfortunately, no. Late fees on overdue payments are not included.
9. Will the bank inspect my home?
Typically, no. Usually, an interior inspection is necessary to determine whether a loan modification is a viable option. These are used to determine the value of your home.
10. Do all banks engage in loan modification?
Yes. All banks are supposed to engage in loan modification. Some are easier to work with than others.