It seems that few people have been left unaffected by the poor economic condition of the United States. With the unemployment rate higher than it has been in decades it is no wonder that families are very worried about how they will manage to continue making their mortgage payments.
Information is everywhere in the media about available help for homeowners that are faced with foreclosure proceedings. However, nothing seems to be available for the homeowner that is getting close to defaulting on the loan. Does a homeowner have to begin missing payments to receive any help? The answer is no, this homeowner may be able to qualify for an equity loan modification.
Many people have never heard the term "equity loan modification.' It is a negotiation of the mortgage loan that takes place between the lender and the homeowner. A homeowner who is fortunate enough to have high home equity is able to do a simple refinance, but this is impossible for the homeowner who is already knee deep in financial turmoil. Many homeowners are facing this dilemma due to the plummeting property values of the past few years. For homeowners that are struggling to make their payments they may also be able to negotiate a lower payment with a lowered interest rate, a reduction in the principle amount or a longer loan period.
The beauty of an equity loan modification is the fact that the homeowner does not have to wait to default to be able to apply for this modification. Lenders actually prefer to be kept apprised of any situations that have come up that may cause the borrower to miss payments. If they begin the modification process early, they will be assured of receiving payments throughout the negotiations. Lenders seem to be more receptive to working with homeowners that are still making payments. They feel more inclined to assist people that are doing all they can to rectify their situation prior to it escalating to a point that nothing can be done. These homeowners are seen as responsible and are considered to be less of a risk.
There are many circumstances that lenders will consider to be legitimate reasons for defaulting on a loan. They normally consider things such as loss of employment or an extended hospitalization that resulted in insurmountable medical bills to be valid reasons for difficulties. Some lenders however, may think that these situations are nothing more than extenuating circumstances and expect that the homeowners will overcome them with time. Lenders are not known for tossing money to every homeowner that is having difficulty making their payments. However, they may be willing to negotiate an equity loan modification for homeowners that they think are a credible risk.
The government has provided $75 billion to help lenders with the equity loan modification process. This has been done in an effort to stimulate the struggling housing market. Lenders are awarded a bonus for every loan modification that is processed. This is beneficial to both the lender and the homeowner and is expected to help the economy as well.
Negotiating a mortgage loan modification is not an easy process and most homeowners have difficulty if they undertake this alone. This is an important step for homeowners that are nearing default and it should be taken seriously. It is a good idea for homeowners to enlist the help of an experienced company that can negotiate with the lender of their behalf. These companies are experienced and will probably be able to negotiate a far better deal than a homeowner could by themselves. Homeowners who are going through these kind of financial problems feel much better when they have someone with experience fighting on their behalf.
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