Loan modification options are being offered everywhere. "Let us help you save your home from foreclosure." "We can lower your payment." Are these options real or a scam?
Loan modifications do exist, and yes they are real. However, caution should always be taken before you sign up with a company to do your loan modification. Don't automatically assume that because they say their process is backed by an attorney that their program is any more legitimate.
First, what is a loan modification? A loan modification is when your mortgage lender agrees to adjust your mortgage payment. That adjustment may be temporary or permanent. They may change the terms of your mortgage from adjustable to a fixed rate. They may lower the payment for 1-5 years, or permanently. They may suspend or allow you to stop making payments for a few months but put that amount on the back end of your loan, meaning you pay the same but you'll just pay on your mortgage longer. It all depends on your lender and what type of loan you have. It also depends on what caused you to require a loan modification, how long your financial situation will take to correct itself, and when or if it will improve.
Many people pay loan modification companies out to desperation in order to stop their foreclosure and save their home. Often they pay $1,500 to over $7,000, and then later discover that not only did the loan modification not get approved, the company may not have done
anything to stop their foreclosure at all. I'm not saying that every company offering loan modifications is a fraud, but you first need to know if you're even eligible.As painful and as scary it might be, call your lender. Make sure you get to the department that will actually be able to help you with your loan modification. Don't tell the receptionist who answers the phone, they don't know anything, can't help you and don't care. Make sure you speak to the Loan Modification department. Yes, there usually is one. If they won't help you or tell you you're not eligible, ask them why. This is the information you need to make a decision whether to seek outside help or not.
If you really can't face speaking with your mortgage lender, my next suggestion is call a local real estate agent who specializes in short sales. If they understand this market and understand what makes a successful short sale, they should be able to either explain whether a loan modification will be a good option for you as well as explain all your other options including short sales, foreclosure, deed-in-lieu, etc. If they don't know these things or can't explain them, call another agent. This is an avenue I recommend to everyone because its FREE advice. Loan modification companies have the goal of getting your money whether or not you're a good candidate, and even if they say they'll refund your money, wouldn't you rather not spend it before you find out they can't help you?
If your financial setback is temporary, this may be a great option for you. However, if you have no equity in the property, or your income will not improve in the near future, you're probably better doing a short sale on your property.
If you'd like more information on loan modifications and short sales, don't hesitate to call or email me.
Heather Peck
Rosen & Company West
702-595-7380
LasVegasExpert@yahoo.com
www.HeatherSellsVegas.com
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