The Best Method You Can Use To Prevent Foreclosure

By • Feb 25th, 2009 • Category: Foreclosure

Prevent Foreclosure

The thought of having your house go into foreclosure is a scary prospect and you need to do all you can to prevent foreclosure. Not only do you lose your home in a foreclosure but you also lose your dignity and security. Also your credit rating falls drastically. This can make it hard to find a job, when renting an apartment or you want to get approved for an auto loan along with several other common place activities. Qualifying for a new mortgage is completely out of the question for a minimum of 5 years.

 The Best Method You Can Use To Prevent Foreclosure
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So how do you handle this predicament? How do you save yourself and your family from losing you home? How do you avoid foreclosure?

There is one answer that stands out from the rest: A Loan Modification, which is sometimes referred to as a Mortgage Modification. What follows is a description of what a Loan Modification is and how it can help you to prevent foreclosure.

What is a Loan Modification?
A mortgage modification is basically a legal negotiation that is held with the mortgage company and a home owner’s representative. During these negotiations an agreement is made to alter the loan’s terms, such as the interest rate, monthly mortgage payment or the length of the loan. The outcome is a reduced mortgage payments which are more conducive to the homeowner’s present economic situation.

What would make a bank to be agreeable to adjusting my mortgage terms in my favor?
For a lender to foreclose on a house is an expensive process for lenders. They have a lot of paper work they have to pay someone to do, more often than not they sell the house for less than its worth and they do not make any money from the interest in the years to come. Simply put it is much more practical for lenders to negotiate rather than foreclose. It is truly a win/win situation.

What is it that bankers alter to make my mortgage payments more manageable?
Generally there are four possible alterations a mortgage company can make to a home owner’s existing loan:

Reduce interest rates ? The lender agrees to lower your interest rate which will lower your monthly payments. This frequently happens when your loan is an adjustable rate mortgage (ARM) and the interest rate has gone up considerably.

Lower monthly mortgage payments ? This is self explanatory; the mortgage company agrees to reduce the payments but you will still pay the full loan. Often this is, for a a few years.

Reduce the principal owed ? There are times when a regions’ housing market slumps so badly that a property is valued at less than what is still owed. In situations like this the mortgage company could reduce the total value of the loan.

Extend the length of the loan ? This may seem like refinancing but it is not since you do not have to qualify, you do not have closing costs, etc. In this scenario the mortgage company extends the length of your loan which gives you more time to repay the same amount of debt.

All of these adjustments are designed to reduce your monthly mortgage payment to make your home affordable again. You could possibly get more than one adjustment but this is not a common occurrence.

The best of these solutions is the reduced interest rate. Not only does it reduce your monthly payments but also lowers the amount you will be paying over time. For those of you who are looking for a mortgage modification you owe it to yourself to check out and apply for a free evaluation to prevent foreclosure.

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 The Best Method You Can Use To Prevent Foreclosure
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