Simply saying loan modification presents a new agreement with your existing lender where the terms of the existing mortgage are changed. This is usually done to make it easier for the borrower to repay the loan. The main goal is to make mortgage payment more manageable by lowering monthly payments. There are two categories of people which usually come to these solutions at the end. In both cases, this is a big mistake because it ends up with bigger depths on their credit cards or with friends and the other ones who eat only whole rice month so they could save money for the mortgage rate. Do not be those people and inform yourself about loan modification alternatives which could save you money and time.
These options are made to make your mortgage more affordable, no matter you lower your monthly payments by prolonging the loan paying period or reducing the outstanding balance due on the home loan. It is important to remember there is a difference between traditional mortgage refinancing and loan modification, first one is a brand new loan which is used to pay off the old loan, and the other one is an adjustment of your existing loan which can be temporary or permanent.
There are some recommended private banks or government programs like Home Affordable Modification Program which offers reducing monthly mortgage payment to 31% of a homeowner’s pre-tax monthly income, extending 30-year-old mortgage to 40-year-old mortgage or reducing the rate of interest on the home loan.
There is also The Home Affordable Refinance Program which gives out a new loan to the clients can repay existing mortgage by rebounding themselves with the new loan terms.
There is even a program which helps people who don’t want to keep the house known as Home Affordable Foreclosure Alternatives.