The Truth About Home Loan Modifications And Is It Right For You?

Like going into a car dealership, many times the first question you hear is “what do you want your monthly payment to be?”.  Anyone that understands finance knows such is not the right question when it concerns your wallet.  The real question is “how much do you want to pay for the home?”.   In other words, after all the interest and after making all the monthly payments how much did you finally pay?  That is the real question and what you need to ask your self when considering a loan modification.

 For example, let’s say you are not current on your mortgage because you like many other Americans have fell upon hard economic times and that you owe $300,000 on your mortgage and the property is currently worth $100,000.  Does it make sense to modify you home mortgage with a loan modification? – Probably not.   You are most likely not going to get a principal reduction or an interest reduction.   There are many attorneys or so-called loan modification companies [now not allowed unless operated by an attorney] that claim they will get you principal reductions or interest reductions but the chances of accomplishing this is very slim.  We like to think of it like a lottery ticket – while it could happen, your chances are slim.  Banks are not in the business of giving things away.  We advise our clients with the truth to attempt to save you money.  Now in some cases a loan modification on your home might be the perfect solution.  Everyone’s case is different.  If you are a senior citizen maybe the monthly payment being lowered is all you truly care about and such is understandable.  Or, in some cases if your home is worth more than what you owe where you have equity, a loan modification makes sense.  In the first example above, most should not consider a loan modification.