An Analysis of How a Loan Modification Affects your Credit Score

Having to deal with foreclosure can be difficult for homeowners facing it. Their hard-earned equity has been eaten up by plummeting real estate values. Despite having equity, qualified buyers have become hard to find due to stricter lending requirements. Homeowners whose credit score has been hit by foreclosure, short sale, or deed in lieu are often devastated. Instead of selling your home and taking a better paying job, stay put and make your payments more affordable if you cannot or do not want to sell. A whole new world awaits you when you modify your home loan “연체자대출”.

Modifications Made to Loans

Modifying the loan terms is a process in which the mortgage lender changes the original mortgage agreement. The mortgage servicer negotiates internally. As a result of the loan being brought current, there tends to be a lower interest rate and sometimes, a longer mortgage term. By modifying the loan, the borrower can make their future mortgage payments more affordable after the loan has become current again. Modification programs are available through the United States government. One of these is HAMP (Home Affordable Modification Program), a program that encourages lenders to modify loans in their portfolio.

The government receives stimulus money for each HAMP loan that is successfully modified. In return for its efforts, the lender receives cash as well as a newly modified loan with low interest rates and an escrow account. Having cash promises the lender a seat at the negotiating table where he might not have otherwise been seated.

The Impact of Modifications

There will not usually be a HAMP modification or in house modification unless there is a delinquent loan on the books. Consumers are significantly discouraged from asking about changes due to this simple fact. Despite the fact that a few late payments will affect your credit, a foreclosure will hurt your credit far more. Once the loan modification is complete, your credit score can also be improved far more, while the lower mortgage payment will decrease your debt-to-income ratio. For those considering a loan modification, seek financial advice, and contact your loan servicer and a loan modification lawyer to find out the details and to begin the necessary paperwork.

A Start to the Process

The modification process is well known to most lenders. If you have any questions or need help, feel free to seek the advice of a loan modification attorney as well. Lawyers who have experience know how the legal process works. An application must be completed, and required financial documents such as bank statements and tax returns must be submitted to your lender.

Approximately 8 weeks are needed to complete the process. Your lender will send you the final paperwork to sign as soon as everything is completed. Your credit score may not take a drubbing if you make your mortgage payments as the new modification has agreed. However, every individual is different and there are many variables that affect credit scores.

A few examples of these variables are the amount of delinquency you had in making home loan payments before the modification and whether or not the account was reported paid less than owed, which is not a good credit rating.

Our goal is to legally save the homes of homeowners who have fallen behind on their mortgage since 2007. We are a group of loan modification attorneys. As a homeowner ourselves, we are committed to helping homeowners make it through these tough economic times. In a loan modification, mortgages are restructured to make them more affordable for homeowners who have experienced financial hardship.