You probably have a lot of questions about loan modifications, and how exactly they work. We’ve put together a list of the most common questions from our clients below. Let us know if you have any questions you’d like answered so we can provide them on this page for others to learn from.

Question: Are all loans eligible to be modified?

Modifying a loan requires the lender and borrower to agree on a modification settlement. Since the modification will allow the homeowner to keep paying their mortgage, and avoid foreclosure, the bank is very willing to work with the homeowner on modifying their mortgage.

As the concept of modifying a loan becomes more common, lenders can be expected to increasingly approve modification requests.

Question: I have a $100,000 loan, and would like to increase the total loan amount to $150,000 — Can a loan modification work in this case?

A loan modification is not a refinancing. A refinancing is where you apply for a new mortgage, and get rid of your old mortgage, and this process requires paying high closing cost fees and other fees related to taking out a new loan.

Since a loan modification is not a refinancing, you don’t have to pay very high closing costs and mortgage broker fees. A loan modification will allow you to adjust your $100,000 mortgage, and reduce your mortgage payments, as a result of a financial hardship.

Question: I have a lender who will agree to a mortgage modification. Do I just write them a letter to create the new terms?

Your bank wants you to just sign on the dotted line. They are going to offer you the worst terms on a loan modification, with everything in their benefit.

Remember, in these transactions, you hold the power. The bank doesn’t want your home to foreclose, because then they’ll be stick with your house that they will have to sell and will lose money on.

The bank wants you to stay in your home, so you have the power to negotiate with the bank and tell them the terms you want. As long as you can make your payments, the bank is happy, so be sure to never accept their first offer.

If you work with one of our loan modification specialists, they know all of the tricks of the banks and can help you to get i) interest rate reductions ii) reduction of your principal and iii) significantly reduced mortgage payments.

Question: Are loan modifications a new concept?

Loan modifications are not a new concept, they have been used since 1994 and are not coming back into popularity because of the benefits they offer to homeowners in helping them to avoid foreclosure.