+12

Smart Ideas to Modify a Loan

By Chantal

 Modifying a loan is getting on the re-negotiating table with the person or organisation or institution that lent you money or funds for the realisation of a particular project. That is relooking at the terms and conditions of the loan agreement and adjusting / amending it to a more reasonable level for the borrower. This is usually done to improve current status or to avoid situations such as foreclosure. In the case of a mortgage loan there are certain procedures put in place to modify the loan program especially to a more affordable plan but this varies from place to place depending on the financial legislations and regulations in force in the said jurisdiction. When modifying a loan, one of these factors is usually placed on the negotiating table and typically for reduction reconsideration:

  • Modification of loan terms and type
  • Interest rates
  • Repayment schedule and package
  • Timeframe

What are the benefits of modifying a loan?

  • Modifying a loan gives an opportunity for amending the terms and conditions of one’s previous loan agreement, hence improves or relieves the borrowers stress
  • Loan modification ameliorates the business tension between the loaner and the borrower
  • It could bring about the reduction in the interest rates
  • It could ameliorate the repayment plan to a more reasonable deal for the borrower
  • Its repercussion on one’s credit score or value is less significant than that of a foreclosure
  • The borrower continues to benefit from the terms and foreclosure is put on hold, hopefully permanently

Loan modification from the loaner’s perspective

Mortgage institutions or banks commonly stand to greatly lose financially in the advent were the mortgagee is in the position where they can no longer make their loan repayments. Here are some of the options open to the bank when the borrower is unable to repay their loans promptly and adequately:

  • Foreclosure in the case of a home. Bank repossesses the property mortgaged
  • Financial institution collects or hires a third party to collect the payments via garnishment or levy or fees etc.
  • The bank could abandon the case.
  •  The bank can wait for the homeowner to declare bankruptcy and hence gain full ownership from the borrower with little payoffs.

Loan modification therefore benefits both the mortgager and mortgagee but not in all case proves to be more profitable for the financial institutions than a foreclosure.

How to approach loan modification

Step 1: Put together your financial information – gather all necessary financial documentation related to the loan. This is essential before laying one’s case in front of the loaner. One has to ensure the following documents are inclusive:

  • Terms and conditions of the previous loan
  • Financial and bank statements
  • The repayment schedule and how it has been going on (this should include credit card payments and or student / car loans)
  • Proof of income or revenue details including income tax returns

Step 2: Prepare to explain why you need a loan modification – be prepared to describe the adversities and financial difficulties you are going through vis-à-vis your current loan package be it a short or long term issue. The loaner understanding your situation is the greatest key to having a loan modification and hence will be better placed to suggest a more suitable solution.

Step 3: Quickly contact your loaner or financial organisation or institution – request for a loan modification and enquire on the eligibility of your case towards the said modification. Most mortgagers want to help and keep borrowers from foreclosure while ensuring they remain loyal

Step 4: Ask questions and stay in touch – always do a due diligence research on the procedure of modifying a loan and what package is most suitable for you. If need be get advice from an expert in the domain. Stay in touch with the lending financial institution so as to be updated as to the progress of your application or eligibility for a loan modification.

Step 5: Persistency– remain persistent in the demand for a loan modification; the process might be frustrating, time demanding, and require the resubmission of justification documents. Be steadfast and ride it off

What to avoid when modifying a loan

There are some businesses or mortgage modification facilitators or helpers that propose their services in accompanying you through the process. They are usually expensive and sometimes require as payment for their contribution the sum equivalent to a monthly mortgage payment.This extra expenditure can prove to be heavy on some persons or families battling to balance up their cash flow or financial situation.

Bear in mind that the same information and documents one would present to these businesses required for modifying a loan are same documents required by the financial institution, so why not just approach the bank on your own and demand for a loan modification. That notwithstanding the choice to hire a loan modification facilitator although not indispensable or essential depends on the borrower.

+12
Author's Score 4.1
Up Votes
34
Down Votes
0
Articles
6
Voted on
1 articles
For everything fun and local, you can find it on Fonolive
Tags:
foreclosure,mortgage, modification facilitators,borrower,credit score,loan,repayments ,

Recent Articles

One of the most stressful yet complicated decisions you will make concerning your home mortgage will be which mortgage lender to choose. Today there are hundreds to thousands of mortgage broker in Vancouver out there who are eager and ready to accept your loan application. But just because a lender accepts your application doesn’t mean it’s the right deal for you. So, it’s important to make sure you shop around and choose the best mortgage lender for your needs. Fortunately, there is one mortgage broker in Vancouver who cares about you and that is MAC Mortgage Approval Corp. Keep on reading to find out what sets MAC Mortgage Approval Corp. apart from other mortgage firms....
As we know that commodities are the raw or primary product that could be satisfied the need like Soybean, gold silver and base metals. As every person want to generate a secondary sources of income. In india Commodity Market is a market where different commodities are traded on its derivative contract. Derivative are the contract whose value is derived from the underlying asset or the contract where delivery of security or commodity held on specific future date. Like a stock market NSE provide a platform to trade in different shares, for commodities MCX and NCDEX are the Exchange in which trading on commodity derivative contract held. MCX (Multi Commodity Exchange ) mainly known for the...
Indeed, bad credit rating is not something good. But bad credit history does not necessarily mean that you are limited in a possibility to buy a car or that you can buy it with disastrous consequences to your budget. It is rather a matter of perception and degree for many people, because even after going bankrupt there can be different situations for getting another loan. But no matter how bad things were in the past for you, there is always a possibility to get a loan for purchasing a car. How to be approved while having bad credit history? So how to get bad credit car loans? Even though you have a bad credit history and not very high chances to get a loan, first of all, you need to do...
Figures reveal that a whopping 10% hike was observed in annual UK household bills thanks to increasing car insurance, hike in energy prices and soaring home insurance costs. The total average price of car cover, energy bills and home insurance was estimated to be £2,216.02, which is around 9.7% higher than 2015. The highest increase was observed in car insurance where motorists have to pay an extra £96.79 in a year. One of the biggest reasons is the government’s implementation of higher Insurance Premium Tax (IPT). It was observed that there was a 7.3% rise in energy bills and the consumers had to pay £94.23 more on their average annual bills. Nonetheless, if we...


Copyrights © 2016 Voticle. All Rights Reserved.