Sometimes life deals you some unexpected blows. You may have lost your job or gotten divorced or experienced a health problem. You may find yourself unable to meet your monthly obligations and are contemplating filing for bankruptcy. If you're worried about what will happen with your New York home, then you might find it refreshing to learn that seeking out a loan modification might be an ideal option for you to consider.
The financial industry came up with the concept of loan modifications to help struggling homeowners continue making mortgage payments while also reducing a lender's need to pursue collection efforts.
Lenders have several options that they can offer homeowners if they're struggling financially. They can lower their interest rate, extend the length of the loan, change it from an adjustable to a fixed-rate one or elect to defer or forgive the principal. Lenders can also tack on any amount in arrears onto the back of the loan.
There are several benefits associated with loan modification. A lender can avoid foreclosure. A homeowner may qualify for participation in a government-administered borrower assistance program like the Flex Modification Program if they have either a Fannie Mae and Freddie Mac loan.
Financially strapped homeowners must file a motion in court if they want to pursue a loan modification.
Lenders generally require homeowners to show proof of income and an ability to pay before allowing a borrower to do a loan modification. They may also have a homeowner make up to three payments as evidence of their commitment to pay what's due. Homeowners must generally be spending at least 31% of their monthly income on housing costs to qualify for a modification of their loan.
One of the best things you can do if you're having financial problems is to consider a loan modification. A real estate attorney here in Manhattan can advise you of how the steps that you must follow to pursue this option here in New York so that you can start to resolve your financial woes once and for all.