For people who are having problems keeping up with payments or trying to refinance their home for lower mortgage payments to avoid foreclosure, there is help on the way. A loan modification program helps those who are in default of 30 days or more, and those who cannot refinance due to decline in housing values and credit tightening.

The state of the economy has hit hard and in the process has taken businesses and jobs with it. Home values have fallen, paychecks don’t go as far, and all of this has lead to homeowners not being able to pay their mortgages. As a result, many are now facing foreclosure.

The problem is that there are a lot of people who owe more on their homes than what it is currently worth. To make matters even worse, homeowners that are forced to sell their homes below the appraised value; so they can get out from under the mortgage payments they cannot afford any longer.

Some claim that a loan modification is the answer, but this information can be confusing. To make it easier, there are companies that you can consult who can help with the loan modification process. Homeowners can obtain a free consultation from a modification specialist who will be able to determine the modification program that is best for their needs, without all the confusion.

Since you can only get one loan modification in the life of the loan, it is important that you handle it correctly. If you are more than one month behind on your loan, you qualify as a default borrower and the quicker you act, the better your chances of success.

Essentially, the program gets your mortgage payment, including insurance, interest, taxes, insurance and association fees, reduced to no more than 31 percent of your gross monthly income. This is accomplished by adjusting the mortgage interest rate, the loan term and principal amount, in collaboration with your lender.

Terms are lengthened to as long as 40 years, interest rates are reduced to at least 2%, and the principal amount owed is reduced as a portion of the debt is forgiven by the lender or the repayment of it is delayed.

Though lenders are encouraged to work with modification companies to adjust the loans, they are not required to do so. To increase lender participation, the government gives a lender incentive of $1,000 per year for up to 3 years if the borrowers remain in the program. Borrowers can also earn $1,000 per year in principal reduction for up to five years if they keep the payments current.

Even borrowers who are in foreclosure or bankruptcy may be eligible, although the court may order the loan modification, in the case of bankruptcy.

There is fantastic opportunity for eligible borrowers in the loan modification programs. If you are in one of these, then you should seek a consultation with a professional who can help you into the program that is right for you.

Certainly everyone in America has by now heard of government efforts to help the sub-prime mortgage crisis facing many citizens and may have even wondered about the prudence of contacting loan modification companies. This article will address some of the facts regarding restructuring your loan that you will probably not learn elsewhere.

Homeowners who may be facing foreclosure and see the recent federal legislation as a godsend would be wise to remember that the company servicing their mortgage is not concerned with helping the mortgagee. They are only concerned with their own business and its bottom line. They are not always on your side.

The Mortgage Crisis Spin

The U.S. government has put quite a spin on their efforts to resolve the current crisis regarding sub-prime mortgages. Television networks and news reports have jumped on the bandwagon, urging consumers to call their mortgage company and keep their home. They are all proponents of do-it-yourself loan restructuring, advertising the process as quick, easy and fail-safe.

What they are not telling the American consumer, however, is that as a legal document, there are legally binding terms in that mortgage document which affect the available options. Sound legal advice is necessary to negotiate with the financial institution and come up with a resolution that is beneficial to all parties concerned. Without professional help, the homeowner may quickly once again end up facing foreclosure.

Research Options and Know the Details

The best thing the homeowner who is possibly facing foreclosure can do is take the time to research all the available options and educate themselves on the fine print in their loan documents. By doing your homework, you will be in the best possible position to renegotiate.

If your home loan is already delinquent, chances are that the mortgage servicer has already tacked on additional late and processing fees. These can be upwards of $10,000. Carefully examine the current amount due on your loan to determine if your financial institution has added these exorbitant fees without your knowledge.

The next thing you must research is the exact wording of your mortgage document and the black-and-white terms. There are some mortgage servicers who will attempt to stretch the definition of terms and take advantage of homeowners who do not understand the legal jargon. As well, the loan itself is probably not held by the financial institution you originally dealt with; it has probably been sold time and time again – an important consideration.

Do It Yourselfers Face Risks

If you are considering going through the process of the mortgage modification process without benefit of legal counsel, be aware of some of the drawbacks.

The first one is that the new loan terms will probably contain further legalese that is not in the best interests of the mortgagee. For instance, often you will find a release of liability clause included. For the homeowner, this means that they are not allowed to seek legal action against the mortgage company for any reason – never a good recommendation.

Remember this fact: most of the homeowners who agree to a restructure of their mortgage loan face foreclosure once again with six months of the new terms going into effect. The simple truth is that financial institutions are only looking out for themselves. They only want their money and could care less about what happens to the homeowner.

The best recommendation is to utilize the services of loan modification companies. Their staff is well-trained in the art of negotiation and aware of all legal ramifications. A professional is always best at representing your interests and in today’s economy, it simply does not make sense to settle for less than you deserve.

There are many alternatives to foreclosure, but too many people don’t realize that they exist. If you happen to be among the millions of people struggling to pay their mortgage or even if you’re already in foreclosure, you need to know that you have an alternative. You could try to sell your home in a market where no one is buying, or you could attempt to get a refinance loan, but those options leave a slim chance for success.

One of the most popular ways to save your home is through mortgage loan modification. Rather than refinancing your home or attempting to sell in a market where no one is buying, you can work with a qualified professional to see what type of mortgage loan modification options you have, including lowering your interest, your payments, and even extending your loan so that it becomes more affordable.

Mortgage loan modification isn’t something you can do on your own. You might think that it’s not an option because you’ve already called and tried to get help from your lender. However, the lender won’t give you as many options as they would give to a financial professional who knows what they’re talking about. Mortgage loan modification professionals know the mortgage market and the inside of the lending market, so they’re better able to negotiate with lenders and work out a solution for your mortgage salvation needs.

You need to know that you DO have options no matter how far behind you are on your mortgage payments. Doing nothing is not the answer, because that will only make you a victim of foreclosure that much faster. Instead, you need to take an active role in saving your home, ask for help, and find a solution that works for you. Too many people think they can’t do anything, so they don’t, which is the absolute worst thing you could actually do. If you get involved and research your options, you might be surprised at how easy it can be to save your home from foreclosure by loan modification.

Mortgage loan modification is only one alternative to foreclosure, but it is one of the best things that you can do. The professionals you work with will help you to determine what you can afford and how to go about getting your mortgage back on track, so that you’re securely able to pay your mortgage each month, thereby being able to keep your home. If you’ve been doing nothing because you didn’t know what to do, now is the time to ask for help and see what alternatives you have to save your home.