In the US, the increasing number of borrowers for home loans had increase dramatically. Since the mid of 2000s the US housing market started going through continuous declines.
Due to such reason borrowers rates have increased and simultaneously people are now having difficulty paying their monthly payments. Some now are trying to find out how to apply for a loan modification so that they can avoid the huge possibility for home foreclosure. Unfortunately the home loan lenders are too applying long and unfriendly strategies that are making the borrowers unable to pay the loan amount in time.
Such scenarios are also creating enough problems for the borrower to qualify for the loan modification process. On the other hand banks are also denying modifying the loan amount to an affordable stage. Well, these problems can too cover you when you will opt for the home loan modifications processes. So, the best way to get rid of such unwanted phase can be achieved through comparing some the key elements that are associated with the home loan modifications.
Home loan modifications goals:
Frankly, it can be suggested that if the borrower needs a home loan modifications then he/she can reduce the amount of their monthly payments. In this regard you can take some necessary steps to cut down the interest rate of the loan. But how you can do this? Well, there are ways:
- Extend the repayment time of the loan.
- It will stop the interest rate from adjusting upward.
- It will decrease the main balance you owed.
- It can eradicate the negative amortization term.
- It will add delinquent payment for the main balance.
However, the home loan modifications goals are not only depending on the borrower. It also depends on the lenders that are showing unwillingness to grant reduce for the main balance. Such deduction for main balance can create a loss for the banks too. On the other hand there are homeowners that are not in the mood to pay the mortgage amount, as they are thinking that the property value will cost less than the mortgage amount they have to pay further. Keep in mind it’s the amount that the borrower has taken from the lender as the principal balance against the home.
Therefore, it’s a huge failure for the home loan modification process to reduce the main balance and this has caused the decline for US’s housing values. In this regard US Comptroller for the Currency’s has found that most of the loans are becoming delinquent after the rate has been modified.
However, as a borrower you need to know the process through which you can apply for home loan modifications. The requirement for home loan modifications may vary from one bank to the other. First the borrower will have to contact the bank’s loss mitigation section and has to put in an application for home loan modifications.
Then the lender or the bank will offer the borrower an application form that has to be filled up and submitted to the bank further. As a borrower you will also require to attach other documents with that application form for further processing. Bank may ask you for the documents like bank statement, return of tax and hardship letters to be submitted along with that application for home loan modifications. Then the bank or the lender will ask you for a new loan proposal or can simply reject your application for the home loan modifications,
and that is absolutely depending on their terms and conditions. If you will get qualified for the new loan and will accept his proposals bring by the lender then the loan documents will be formally completed. It is also advisable for the borrowers to contact the concerned department of the bank to look for whether or not the documents have been received and submitted for further proceedings.