Most of the people who require a loan modification program are having their homes foreclosed on. This leaves them without any source of income, thus the need for a housing loan modification program. However, some disadvantages need to be considered before taking up a lender loan modification program. The fact that the lenders are ready to lend you money despite your financial situation should be enough reason enough for you to think about using this option.
The first and the most obvious advantage is that you can easily qualify for a loan. You must comply with all the terms and conditions put forth by the lender, which you cannot do if you fail to have a decent credit record. Your credit score will determine the amount of money that you can borrow, the rate at which the loan will be approved, and the duration for which it will be valid. The homeowner must comply with all these conditions or face disqualification.
Also, there is an allowance provided by the federal government for the homeowners who were unable to pay the original mortgage dues. If this is the case, the lender must give you an extension, which must be applied before you default on the loan. This means that you will be given time to catch up on the outstanding amounts. The extension will be valid for as long as it takes, extending as much as six years. Your lender must inform you about this before approving your loan mod. If the loan mod is not complied with, the Federal Housing Administration will foreclose on your house.
Homeowners must also abide by specific rules or regulations. The first one is that they must always be living in the house. This implies that they must also occupy the place during the tenure of the loan mod. They must also submit all the necessary paperwork to ensure the success of the process. They must again hire a licensed financial advisor who will help them in every step.
Installments must repay certain programs under which the homeowners can pay off some percentage of the principal and the remaining amount. This is known as the balloon method. This method has been beneficial in lowering down the financial problems faced by homeowners in the present-day. Besides, they can choose between the traditional and the modified payment scheme. They must carefully evaluate these two options before applying for the program.
When you apply for the loan mod, you must comply with certain eligibility requirements. For this, you must fulfill the eligibility criteria imposed by the government. You must also keep your credit history in good shape. Apart from that, you must have steady employment, which is not short-term in nature. As a result, if you are self-employed or are working on a part-time basis, you can also apply for the loan mod.
Those homeowners who have an income lower than the median monthly income can also apply for the loan modification program. They need to ensure that their monthly income does not dip below a fixed minimum level. The same condition is applicable for borrowers who are suffering from mortgage arrears. The condition also applies to those homeowners who have a bad payment history. But in the case of the borrowers who have a history of late payments, they must also prove that they have made the monthly payments.