Loan modifications have been a hot topic over the past couple of years. With a loan modification, credit scores may be affected. Many times individuals who seek a loan modification already have credit scores that have been affected either by being late on their mortgage or it’s possible that they have already been late on other debts. Depending on the consumer’s credit history there could be alternatives. In an effort to provide loan modification resources we have found the following information:
Mortgage modifications are intended for people struggling with serious debt problems. The modification means the mortgage lender is accepting less profitable terms. The lenders can’t make special terms for every mortgage they hold so they typically make changes if there is a likelihood that the individual(s) may file bankruptcy or end up going through foreclosure proceedings. There are a few factors that lenders review in order to determine whether individuals qualify for loan modifications. In fact, many mortgage loan guarantee programs will only accept modified loans if they are 90 days past due or if the loan is in imminent danger or default, such as the borrower becoming unemployed, a significant reduction in income or a party in the household becomes ill. It should be noted that these are only a couple of factors that go in to the decision process of whether an individual is eligible for a loan mod.
While there is some legitimacy to the lender policies (90 days late, loan in danger of being added to a bankruptcy), consumers should use caution and be wary of some organizations claiming to have the ability to lower credit card payments. Many times they may advise individuals to stop paying. The theory is that once you are late you will have more leverage to negotiate with your lender to settle the balance or get reduced finance charges. They also often charge a fee for their services. The issue with this strategy is that it destroys your credit history. Intentionally becoming delinquent might result in lowering your payments, but at the cost of making it difficult for you to get the best interest rates or perhaps even get approved for a future mortgage or other types of credit. There are potential refinance options that consumers should consider prior to simply allowing credit to go delinquent.
Many consumers are facing very difficult situations with mortgage payments and sometimes have no other choice than to seek loan modification options. Consumers in this situation typically cease any extra spending. However, consumers should keep in mind that paying off auto loans and credit cards eventually makes it easier to make that mortgage payment.
All loan modification companies are not created equal! Consumers should perform research on the companies that they receive directions from. Additionally, never be afraid to ask questions regarding a game plan or directive. Credit histories can make a major difference for families and consumers should remember that derogatory credit histories could result in increased interest rates for current credit cards and denials for other credit extensions. Be leery of companies who simply try to hard sell the loan modification process and do discuss the implications that a loan modification may have on credit. If you would like more information regarding loan modifications, credit history, credit repair or residential refinance go to Caltexfundingresource.com and search Tim Allen Resource.