| Loan modification may not have an adverse effect on | | | | If you are facing a temporary loss of income, you can |
| your credit, but missing out on your mortgage loan | | | | seek a special forbearance. The lender will create a |
| payments definitely will. You must do everything you | | | | revised repayment plan, which will involve temporarily |
| can to stop foreclosure, because it will harm your | | | | reducing or cancelling your monthly payments. |
| credit record for a long time. | | | | However, you will have to make higher monthly |
| The effect of loan modifications on your credit rating | | | | payments when the payment resume. |
| will depend on what is negotiated and how the lender | | | | Usually, the principal is not reduced in a voluntary loan |
| reports your situation to the credit bureaus. | | | | modification, as is done in a bankruptcy. This greatly |
| Mortgage loan modification involves changing the | | | | increases the risk of another default for those who |
| terms of a mortgage loan to make the monthly | | | | are 'underwater' or owe more on their mortgages than |
| payments more affordable. This can help | | | | what their homes are worth. They will have no equity |
| homeowners who are not being able to repay their | | | | to fall back on if they face financial problems. |
| loans to avoid foreclosure. | | | | It is much easier to qualify for home loan modification if |
| Loan modification may involve a lower interest rate, | | | | you have a steady income and your lender feels that |
| longer loan term, different type of mortgage loan, or all | | | | you will be able to afford the lower monthly payments. |
| three. | | | | If you feel that you will not be able to keep up with the |
| If you are not being able to keep up with your home | | | | lower payments after a loan modification, or are too |
| loan payments, you need to discuss your problems | | | | far underwater, you can consider making a short sale. |
| with your lender as soon as possible. Not | | | | This requires selling a dwelling for an amount that is |
| acknowledging letters from your lender will make it | | | | less than the loan balance. The lender agrees to |
| more difficult for you to stop foreclosure. | | | | accept a reduced payoff and forgives the rest. |
| You ought to discuss modification of loan with your | | | | Seek the advice of a professional housing counselor, |
| lender as soon as you find that you cannot keep up | | | | attorney, or trustworthy real estate professional. |
| with the payments. You can do this even if you | | | | Weigh your options and decide on a course of action |
| haven't missed any payments at all. | | | | that will minimize damages to your credit record. |