You’re behind on your home mortgage and have decided to pursue a home loan modification. It sounds ideal – your mortgage payments go down and you get to stay in your house. The hard facts paint a different story.
Only 7% of homeowners who are behind on their mortgage qualify for a home loan modification.
Reasons you may not qualify include:
- You obtained your mortgage after January 1, 2009.
- You make too much money. Your mortgage is already considered “affordable” for your income level.
- You make too little money. You don’t have enough income to support a modified payment.
Even if you do apply for a home loan modification, the lender may continue to move forward with the foreclosure process as the loan modification request is reviewed.
The home loan modification process can take months. Banks are huge entities, and often the left hand doesn’t know what the right is doing. It’s not unusual for one department to be reviewing your request for a loan modification while another department is accelerating the foreclosure process. If your request for a home loan modification is denied, you need to have a Plan B in place to avoid foreclosure. Since every homeowner’s situation is different, we always recommend that you speak with a professional who can advise you on the legal and tax implications for your circumstances. Washington Property Solutions offers FREE real estate attorney consultations as part of our service.
Of the small number of homeowners who do get a home loan modification, nearly 50% still default on their mortgage.
Even after a home loan modification, many homeowners still can’t make their mortgage payments. Why? A government analysis of the homeowners who did receive loan modifications showed that the large majority received a reduction of less than 10% on their monthly payments. That small reduction generally isn’t enough to make a difference in affordability for a financially struggling homeowner. And remember: a home loan modification does not change the amount of money you owe on your mortgage. Since you are making lower payments, it will take you even longer to pay off your mortgage.
It is critical that homeowners considering a short sale meet with a professional to review their options and discuss the potential legal and tax implications.
Washington Property Solutions offers FREE real estate attorney consultations as part of our service.
Call us at 425-381-2233 to schedule a free confidential consultation.
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