Thompson Law Group, P.C.

A loan modification could help you avoid foreclosure on your home

Buying a home is often the single biggest purchase and investment of your life. Many people spend years saving up for a down payment and decades building up equity. Then, something happens that leaves you struggling to pay your bills. You may miss a payment, and that's when the real trouble starts. Your mortgage company or bank could attempt to foreclose on your home if you aren't paying in full and on time.

For many people struggling with monthly expenses, a mortgage modification could be the ideal solution. Changing the terms of your mortgage to reflect your home's price decrease or your reduced income can ensure that you can continue to pay your mortgage. A loan modification could help keep you in your home, even if you've been struggling to pay your mortgage recently.

Lenders may be willing to change your mortgage terms

Believe it or not, many lenders willingly work with home owners to help keep them in their houses. After all, there are serious financial implications to foreclosure. The bank or mortgage company has to pay for expensive legal proceedings. They also have to determine what to do with your home after the foreclosure. Homes that end up unoccupied during the foreclosure process may end up damaged and may not command as good of a price on the real estate market.

By working with borrowers to fix or change mortgages, lenders can avoid all of the expenses related to foreclosure. They also secure future payments on the property, helping to ensure they recoup the money invested in financing your home. Finally, foreclosures can damage a lender's reputation. It can make them look unfeeling to the public and make their loans seem more risky to financial investors and other banks.

Modifications can help you seek out affordable payments

Life has a way of throwing curve balls when you least expect them. You may have thought you were in a great place career-wise, only to have your employer sell the business. Suddenly, your job no longer exists or you have to take a pay and benefit cut to remain with the company. An accident or illness could mean you missed work and may not be able to return to the same position.

Regardless of why your mortgage payment is more difficult than before, a modification could help you. Lenders can adjust the terms to create a payment that is affordable based on your current income. Generally, the industry standard for affordable housing costs means no more than one-third of your income going to housing. That helps ensure you can still meet your other financial obligations. Instead of selling your home for a loss or facing foreclosure, you should explore whether you qualify for a modification of your loan.

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