If things are getting tight and you think it is a choice between losing the house or declaring bankruptcy, I have news for you. You have other choices and you should avoid bankruptcy if possible! It is widely acknowledged now that less than 5% of people who file for bankruptcy actually avoided the compounded pain of foreclosure. Avoid getting stuck with both a foreclosure and bankruptcy, try for a loan modification immediately! If you qualify, it may save you from both these fates.
A home loan modification is the process of restructuring your current mortgage into a mortgage that is more affordable. This means that the terms of the loan change, but the lender remains the same. Modifications to your mortgage generally involve the reduction of your interest rate to make the monthly payments more affordable. In many cases, a loan modification is the only way for homeowners who are unable to refinance to avoid default or foreclosure.
Most know that a foreclosure or a bankruptcy will put their credit in poor standing. Often people tend to think a loan modification would affect them the same way. Previously a loan modification may have negatively affected your credit, but this is not necessarily true of the current economic times.
In today's economic crisis the government, and credit companies, are being forced to reevaluate this process. The government in fact, has encouraged credit bureaus to start using a different code when showing loan modifications in order to give the consumer a break on their credit score.
The government has tried to enforce rules in the last year or so to make it so that a loan modification does not strongly impact your credit in a negative way. While some credit bureaus or financial institutions may not follow suit as well as the feds would like, the fact remains that a loan modification may not impact your credit as much as it may have in the past.
The reason for this change was so that the government could encourage more people to get loan modifications so they would in turn have a greater chance of keeping their homes...and lives, intact. So if a loan modification might help it would definitely be worth your time to consider it, regardless of what you have heard about your credit.
Loan modification is not something you want to do just because you want to do it, but it is definitely better for your short and long term goals than a bankruptcy or foreclosure.
In today's economy, the answer to many people's financial woes is to get a loan modification. However, many people feel they may not qualify for the loan modification, or even worse, don't apply because they believe it will affect them negatively.
Unfortunately there are home loan modification scams, so homeowners need to be aware of this. I recommend using an attorney who is experienced in handling loan modifications. They are used to dealing with many lenders and know exactly what it takes to get your loan modification approved. All major lenders do offer loan modifications. Some of the smaller companies or hard money lenders may not, but generally speaking, the well-known lenders will all offer modifications. Homeowners should begin considering a home loan modification once they've fallen into a state of financial hardship.
The truth is that the process of modifying your home mortgage may be stressful. The same could also be said about going into foreclosure or bankruptcy. So this is why you need an experienced attorney to guide you through the process and advise you on your best options. I offer a free confidential initial consultation, where you can get all your questions answered. Please don't hesitate to contact me as I'm here to help.