4 Pros and 3 Cons of a Loan Modification 

No problem! I will only be able to speak with you if you are located in Washington state, unfortunately so if you're in not in WA - you will need to find an attorney in your state to contact.

Hello! You should probably contact an estate attorney right away. The answer to that question depends on a few factors and there might be other types of debt that needs to be handled as well. You are looking to speak with an estate attorney - they will go through everything with you and advise on how the remaining debt should get handled.

Yes! You should make sure that the modification contract you sign does not have any prepayment penalties though. Some lenders do not allow you to pay the loan off early so you will want to have an attorney in your state check on that for you.

Oh I just notice you go someone info regarding my question. Let me know if that’s how you would respond to my question as well. Thank you!

Hello! A loan modification will likely show on your credit report but the credit score typically only drops once you're missing payments so if you're in default, every month the bank will report to the credit bureaus that you've missed a payment - this is generally what impacts the credit score. Once the modification is done, you then start rebuilding your payment history and your score goes up over time. You should definitely ask your individual lender though! Some banks do different things so this is general advice only.

Hello! It's hard to know exactly why they would offer it to you without me being able to speak with them but this does happen. Sometimes, banks take on new programs that allow them to modify at better terms to you so they may be offering this to you if the market rate interest rate has dropped. Sometimes, they offer them for the opposite reason - to net them more money over time. If they are offering you a lower payment but you are paying more interest to them for a longer time, that would be in their interest. You may want to go over the terms with an attorney or professional in your state to determine if it's a better or worse deal for you. Good luck!

@@nadiakilburn-mortgageforec3635 thank you for your response. I will definitely reach out and get someone to look it over for me. They are saying lower payment. Lower interest rate. No added years from what they were telling me.

You should consult with a foreclosure defense attorney but other options include a deed in lieu, a short sale, Chapter 13 Bankruptcy, a repayment plan, potentially a partial claim or a payment deferral. You should consult with someone in your state who knows how to counsel you on the options.

Probably, yes! A lot of people take a modification, make payments under the modification for a couple years and then find a new lender to refinance with. Whether you will qualify for a refinance is dependent on a lot of factors so make sure you discuss this with the lenders in your state.

I wouldn't be able to answer that over RU-vid - it's too specific of a question. You should consult with a mortgage attorney in your state so they can look at what the lender is actually offering you. If you're in Washington, let me know!

Hi Sandra! You should ask your lender this question as that depends on the terms of the documents you signed when you got your loan modification. You want to ask your lender if "there are any prepayment penalties" associated with your loan modification. If you have copies of your modification documents, you can always take them to an attorney to review in order to give you an answer but you should be able to ask this directly to your bank.

Hello! You can! The timeline depends on other factors like your credit score / how much cash you're putting down etc. so the best person to ask that question to would be a mortgage lender who would be working with you on your new purchase. They can give you a better estimate of the timeframe.

Hi Winston! I don't know exactly your situation over RU-vid so you should probably show the documents to an attorney in your state but generally - if you modify a loan and they give you a large balloon payment down the line, your goal would be to refinance the loan before the balloon payment becomes due.

@@nadiakilburn-mortgageforec3635 the balloon payment is twice the current home value

Hi Ramil! Generally, when a forbearance ends (assuming the forbearance months weren't being reported negatively on your credit report), the loan will technically move into default status while you work on your loan modification. This may effect your credit score - the best thing to do is to try and apply for your loan modification with a month or so left on your forbearance. It is always good to ask the individual lender how they're planning on handling credit reporting since the covid plans are a little bit new. Check with your lender!

Thanks again for the advice and your time, really appreciate it.

Hello! Read the terms of the modification agreement they give you - if they were going to limit what you can do with the property, they would list it within the modification agreement. For most modifications, banks don't care if you start renting out the property but make sure you read all the terms within the agreement! That is where they would list any limitations.

thank you very much

Hi Kim! A foreclosure happens when you are not making payments on your mortgage. A loan modification is one of the ways to resolve the default without having to pay everything you owe so a loan modification in and of itself isn't related to a foreclosure but most commonly, people who are facing foreclosure choose to pursue a loan modification as an option to get current with the bank and end the foreclosure. Hope this helps!

Hello! The loan modification will likely show on the credit report; however, as soon as the modification is approved, you will be able to continue with regular payments each month to keep your payment history showing. Many people are able to borrower again after completing a modification. It's helpful to let a little bit of time pass so that you have a strong payment history. COVID is a very understandable hardship so most likely - future lenders will take these special circumstances into consideration. You can always reach out to a lender to ask them how they would view a loan modification following a COVID forbearance plan just to gather information.

@@nadiakilburn-mortgageforec3635 Thank You so much! Another question should we do a balance transfer on a credit card when a zero interest rate is offered? will this mess up the chances of modification or cause any other problems?

@@BMac6928 I can't answer that specifically as that's giving you direct advice on your financial situation so you should probably consult with an attorney in your state about that. Sorry I can't be of more help with that one!

The loan modification was done however the principal balance was placed as a title lien it will show by hud