If you are having trouble keeping up with your mortgage payments or the terms of a loan, it may be time to approach your lender for what is known as a loan modification. In most cases this is simply a change in your loan that enables you to better meet your monthly obligations.
It is important to know that you can approach your lender directly about a loan modification. It is not necessary to go through a third party to ask for this service. In fact, many third party companies designed to assist you in obtaining a loan modification will charge exorbitant fees for something that you could have done yourself.
Some unscrupulous companies may even take advantage of homeowners in crisis by charging fees for services that they never even complete such as contacting the lender for a loan modification. Instead, these companies may simply take their fee and tell the homeowner that they approached the lender but nothing could be done. In most cases a mortgage lender is required to work with you to avoid foreclosure. There isn't any reason why you can't handle this negotiation yourself.
Before applying for a loan modification, make sure that you have all of your documents in order. You will most likely need a copy of your homeowner's insurance policy, tax bills, summaries of living expenses, and proof of income. Most lenders will require a lot of information to approve you for a modification program; however, if you are diligent in providing what they ask, it will greatly improve your chances of being approved.
In most cases there are two ways of applying for a loan modification with your lender. For most people, the telephone works best. You will provide required information over the telephone, and you may also be required to fax or mail certain information to complete the requirements of the modification. Be prepared to spend at least an hour on the telephone with your lender if you choose to apply this way.
An in-person meeting with your lender is another alternative that works well for those with flexible schedules. At this meeting you will fill out all paper work and provide the required information. The benefit of a face-to-face meeting is that you will not have to fax or mail any documents. In addition, home owners that are dealing with a credit union or for those that have a personal relationship with bank employees may find the in-person meeting to be the best option.
Above all else, remember to stay focused on the underlying problem, such as the reason that you are applying for a loan modification in the first place. Make sure that the revised monthly payments are going to be reasonable, and be aware of long-term effects of the modification such as interest rates and payment options. Keeping all of these things in mind, there isn't any reason why you shouldn't be approved for a loan modification.
Loansafe. How to Get a Loan Modification. Accessed October 26th, 2012.