Homeownership is an essential element of the American Dream. There is a great amount of pride in picking out (or building) a home, raising your children there, and putting money into the house as an investment into your financial future. Unfortunately, home loans can have very long terms, and a lot can change in your life during that time.
A lot of homeowners find themselves struggling to make their monthly mortgage payments, either because their financial situation has changed or they were compelled to enter into a higher mortgage than they could afford in the first place. If you have been struggling to make payments, we understand the tremendous toll that this takes on your mind. Therefore, it is important that you are well informed of your options and that it is possible to stay in your home despite mortgage payment problems.
A Mortgage Loan Modification
If you have failed to make mortgage payments, your bank has the right to seek a foreclosure lawsuit against you. However, know that most banks will not pull the trigger right away and will first attempt to collect what outstanding payments. Further, many banks are reluctant to actually initiate foreclosure proceedings if there is a debtor who has had a relatively good record of making payments, or if the debtor has the willingness and ability to work with the bank.
A mortgage loan modification is a voluntary change to the terms of an existing loan. This can involve several options, such as adjusting your interest rate from variable-rate to a fixed-rate interest, or lengthening the term of your loan. In essence, the idea is to give you a lower, more manageable monthly payment, while the bank gets consistent payments and ultimately receives more interest over the term of the mortgage. We should note that a mortgage loan modification is not a refinance, which is an entirely new loan that replaces the old one. Instead a modification is an adjustment to your current loan, which remains in effect.
Why would your bank be open to a loan modification? Because it costs the bank a lot of money to pay for foreclosure proceedings, to try to re-sell the home, and to maintain the home while it sits on the market. In contrast, a loan modification gets their current homeowner’s loan back on track with regular payments; andsignificantly, the bank makes more money over the longer term of the loan.
Let Levitt & Slafkes, P.C. Work For You
If you are having trouble paying your mortgage, a mortgage loan modification may be in your best interest. However, it is important to consult with an attorney so that you do not find yourself the victim of an even worse loan. At Levitt & Slafkes, P.C., we have provided decades of smart, relevant legal advice to our clients. Staying in your home is a big deal, and we want to make sure that you are fully informed of your rights and choices. Contact Levitt & Slafkes, P.C., at (973) 323-2953, or reach us online to schedule a free consultation.
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