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Mortgage Modification Considerations

April 25, 2012 | Comments: 0 | Views: 182

Besides being a great alternative to foreclosure, mortgage modifications are the least invasive mortgage debt solution. They offer an array of benefits including lowering your payments without taking out a new loan or having to give up the home. Although mortgage modifications do bring some great things to the table, they aren't for everyone. Depending on conditions with your home and your financial situation, you could find that a mortgage modification isn't going to provide the kind of help you need. Furthermore, there are other options available to you, such as refinancing or a short sale, that could better suit you.

Underwater Home

One of the biggest problems facing homeowners in debt today is being underwater on their mortgage, which means that they owe more than the home is currently worth. This is the number one reason for lender denial of a mortgage modification, making it difficult to gain approval for a mortgage modification. Although there are federal programs available to help underwater homeowners like you, they aren't necessarily making modifications the best option. For example, these programs are requiring lenders to be more flexible in lending such as offering to write down a portion of the mortgage debt. However a modification such as a principal mortgage write down may not be in your best interest.

The reason is that when a lender writes down the principal on the mortgage a portion of what is owed is forgiven. When mortgage debt is written down by the lender it becomes your responsibility at tax time. In other words, you could be liable for paying taxes on this amount. Further problems arise when second mortgages are involved. A write down or elimination of debt on a second mortgage loan can leave you fully responsible for the original loan, which makes it less likely that you will receive any further assistance from the lender in the future.

Extended Hardship

Unexpected financial hardship is the biggest culprit to mortgage debt problems for many homeowners. When a financial hardship is expected to last more than a few months, a mortgage modification may not be able to lower your payments enough to be worthwhile. Assuming your financial troubles will persist longer than 6 months, a reduction in your monthly payment due to a modification cannot ensure that you will be able to maintain your payment long term. Even if you were to obtain a modification, any future problems maintaining the new modified mortgage make it less likely that you would receive additional help from the lender, leaving you at risk for foreclosure.

The Lee Law Firms aims to help local residents resolve their foreclosure issues and keep their home. They provide high quality legal representation that helps stop foreclosures and lowers monthly mortgage payments. The Lee Law Firm mortgage loan modification attorneys have many years of experience in all aspects of mortgage loan modification Fort Worth Foreclosure.

Source: EzineArticles
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