home loan modification

There are many different stories and myths about loan modification. The main problem is with the journalists who don’t really have a idea and don’t do enough research on the topic.

We list below many of the common Myths we have come across during our time researching.

Myth 1: You must be late on your mortgage payments in order to be eligible for a loan modification program?

No, this is rubbish even if you haven’t missed any payments you can still apply. You may get more attention if you have been late or have missed a payment, but you can still apply for help on your mortgage from your lender.

Myth 2: A Loan Modification is only required during a foreclosure

This is one of the biggest myths. Most homeowners believe that they can only apply when on the verge of losing their home. A loan modification adjusts your monthly mortgage payment according to your current financial condition so if you are struggling to pay because your interest payments have increase or your situation has changed a loan modification can help you.

Myth 3: Lenders would rather you foreclose than try to modify your loan.

This is exactly the opposite as Mortgage lenders actually lose a lot of money and is a very time consuming process if you foreclose. So they want to avoid foreclosure as much as you do. With failing house prices and no one buying real estate at this moment a foreclosure is very costly for lenders.

Myth 4: Can a Loan modification can hurt my credit rating.

Most loan modifications will not hurt your credit rating score. There may be extreme cases where it can, but this depends on the lender and the type of modification.
A loan modification is just like refinance or re-mortgaging. So really they should help your credit rating as now you can afford your monthly payments without problems. Even the worst case if a modification did slightly hurt your credit rating, just imagine your credit score if you foreclose on your house.