Life changes and homeowners can be affected by events like temporary loss of income, natural disasters, and more. This is where a loan modification can be convenient since it could make their payments more affordable. If this is your situation, it is possible to pay the lesser mortgage each month, but it could affect the loan’s overall interest and credit rating.
In some instances, people might be struggling with their monthly home payments, and they have not paid their dues for a few months. If this is the situation you are currently in, know that you may be at risk of losing your home if the non-payment continues. You have already paid the down payment, renovated everything, and you are halfway through the loan. However, you will still receive a letter of foreclosure from the lenders if you miss the due dates, so to avoid this, here is an option for you.
All About Loan Modification
Know that the modification is not like a refinancing process. Refinancing is the process of replacing your existing loan with a new one with a different term and interest rate. On the other hand, you’re still essentially in the same loan in a Florida home loan modification, but the terms are different. This is how it works.
Getting the terms changed or modified will mean that you are extending your term. As a result, some may have lower interest rates and get the mortgage changed into a fixed-rate loan from an adjustable-rate one. The lender will give you the new terms, but what many homeowners are aiming for is a lower monthly payment. Know that it costs a lot for the lenders to process a foreclosure, so many are more than willing to make some changes to avoid it.
Who is Qualified?
It is worth noting that not everyone who applies is qualified for a modification, and some people may be struggling, but they might not be approved. Usually, those homeowners who are facing imminent default and are frequently delinquent can be candidates.
They might have a higher chance of getting into an imminent default because they have lost their job, had a disability, became ill, lost their spouse, and any other factors that may affect their ability to pay their debts. Check other factors that can affect your credit on this page here.
Types of Programs Available
Many banks and financial institutions may offer these modification programs. They will make the changes, and these can either be permanent or temporary. If your servicer does not have this program, you might be better off asking for other assistant programs from third-party companies in Florida that can refinance your entire mortgage.
The feds have offered these Home Affordable Modification Programs in the USA, but they expired in 2016. Others have prevention programs that have been effective since October 2017. Freddie Mac or Fannie Mae will usually guarantee a Flex Modification Program, and you may be eligible.
Other options are the federal government’s project of helping underwater homeowners refinance their homes or the HARP. The Home Affordable Refinance Program aims to make it more affordable for individuals to pay their monthly mortgage, but you should check and see if this is still available. Some have already expired, and you might want to look for private institutions for modification programs.
Getting the Modification for your Loan
You might be struggling with your current payments, and if so, it is better to get in touch with the servicer or lender for various options. Avoid procrastination and call them right away, so you will not make everything worse.
The application can vary from one lender to another, and some will require you to show proof that you are currently undergoing financial hardship, and others will need letters of intent on why you need to make changes to your loan terms. More information about coping with financial stress in this URL: https://www.helpguide.org/articles/stress/coping-with-financial-stress.htm.
If the lender denies the modification application, you can file appeals to the servicer. You might want to work with housing counselors in Florida that can assist you better and help you understand your options before re-applying once again. The potential downside is that your credit rating can decrease. The resulting dip will not be as bad as a foreclosure, but this will simultaneously affect your application for other loans. If the terms are temporary, you might return to the original terms, depending on the lenders.
