Loan modifications are tedious and time consuming. It is a huge relief when you have finally gathered all paperwork together and submitted it to the bank. It is an even bigger relief when the bank agrees to modify the loan.
The bank will give you the terms of the modification to review. Many times, there is no way to negotiate a different amount for your monthly payment and the terms that the bank give you are “take it or leave it.”
When reviewing the terms of the modification, here are a few things to consider:
Can I Afford the Payment?
If You Do Not Keep Your House, Where Will You Live?
Is the House Upside Down?
First and foremost, make sure to look carefully at your finances and decide whether or not the payment is within your budget. If it is too high, you may consider forgoing the loan modification and finding another place to live after the house has been foreclosed upon.
The bank will have you make trial payments (usually 3-5) so that they can determine that you have the ability to pay the monthly amount. After this trial period, you will be sent a new mortgage agreement that you will have to sign and send back. This mortgage usually takes the arrearages (the amount you owe) and tacks it on as a balloon payment at the end.
It is important to think about where you will go after the bank has foreclosed on your house. You should research rental pricing and decide if you want to stay in the area that you live. If you have children, you may need to consider their schooling and what will be the best for their education. If you want to stay in the same area and rental prices are the equal to or greater than your mortgage, then it may make sense for you to accept the loan modification.
Be sure to check the value of properties in your area to figure out how much your property is worth. If your house is “upside down”, meaning that you owe more to the bank than the property is worth, you should take this into consideration when making your decision about the loan modification.
It is also important to note that qualifying for a loan modification does not necessarily stop the foreclosure of your house. Therefore, if you are considering a loan modification, it is in your best interest to seek the legal counsel of an experienced loan modification attorney in Los Angeles prior to making any decisions. The highly successful attorneys at Vokshori Law Group can advise you of your loan modification options and help you with the best course of action.