Loan Modification Agreements and Saving Your Home from Foreclosure

Everyone wants to believe that their homes are sacrosanct and that their haven is safely theirs and theirs alone. The truth is that almost all of us make payments on our little corner of the world, and if we find our circumstances have changed, regardless of the reason, most of us would not last long in drastically reduced circumstances without falling behind in our mortgage payments. If you are one of the multitudes of Americans affected by the current state of the economy, and you have fallen behind in your mortgage payments, an agreement allowing you to modify the terms of your mortgage could help you avoid foreclosure.

In our current economy, it would not hurt anyone to research alternatives to bankruptcy or ways to avoid foreclosures, because once you need a loan modification agreement, you are going to be so worried and stressed out that it will be easy to become overwhelmed. Understand that if you do find yourself needing a way to save your home, and you are not prepared, it will help you if you enlist the aid of another person, a mediator or real estate specialist to help you explore your options.

Regardless of whether you hire professional help, or decide to do the research and find out for yourself if a loan modification program could help you, here are some things you will want to find out. First, find out what the qualifications are for loan modifications. If you see proof right off the bat that you do not qualify, you can move on to another option and not waste your time. Find out exactly what it is that such an agreement can do to help stop a foreclosure. Determine how much it will cost for you to get an agreement and determine of the costs can be added into the modification itself to prevent you from having to have an initial cost for the proceedings. Find out what the income requirements are for your loan to be modified. Research what interest rates you can expect to get, and finally, find a reputable lender that handles these programs.

Another thing to consider before you take the leap is if this program will really work for you. In spite of the fact that the most a loan like this can be is 31% of your gross income, if you have lost your job and have no income, you will not be able to make the payments, and will simply be postponing the inevitable. Remember that you have to take a good, serious look at your debt to income ratio before you even attempt to seek a modification program. To do this, just add all the costs of your housing…taxes, interest, insurance, and principal…and divide this number by your gross income. The people who need a modification of their loan will see that this will exceed the percentage required.

Programs and agreements such as this will only work for you if you can prove that your situation is going to improve to the extent that you will actually be able to keep the terms of the loan agreement. It is a good chance to turn things around, though, if you are one of the ones who qualify.