Loan modification companies are sprouting up everywhere. We were working on a commercial deal the other day and noticed that a “Loan Modification” business had just leased out 3500 square feet of space in a prime area of town.
I want to be clear to all who read this, we also do Loan Modifications for our clients. When a client is given the opportunity to lower their payments by hundred’s of dollars because we can convince the lender to adjust the interest rate, or reduce principal balance, and in some cases eliminating or reducing the second.
With President Obama now in office, there are talks of lenders being forced to forgive principal balance. We have a way to go on these ideals, but they will certainly be of benefit if they come to fruition.
If you find that you are not able to make your house payments due to loss of income, increased monthly payments or any kind of hardship; you do have options. The process for a loan modification is very similar to a Short Sale. The lender wants to see a complete “package” of your personal situation and finances.
Once your lender and your loan modification specialist has come to the best offer possible, it’s time to look at the big picture….
Forecasts are clear that we are going to see a continued decline in home values for at least the next two years. Talk to your real estate agent about projecting out what your property will be worth based on current market trends.
If your lender has agreed to cut principal balance, or provide you with a payment based on lowing your interest rate for a fixed period of time your most likely going to do well by taking the offer.
Now, let’s look at another scenario. Your loan modification offer is going to lower your payments, but not your principal balance. Time to think, how upside down is your property? Have your real estate agent provide you with what your house is worth today. Then factor into the equation where the price will most likely be in two years….
It’s an emotional time, I know, believe me! If you can remove that emotion for just a little while, this is a decision that will affect you for years and years to come. Whatever you decide, just know that you have choices. Don’t let anyone tell you otherwise.
