Four Things You Should Consider Before Doing a Loan Modification

When considering a Loan Modification there is a cornucopia of things to consider. After doing them for over a year now, I've narrowed it down to four.
Is It Worth It?
This is a question that only you can answer. It comes down to numbers, but it mainly comes down to whether you want to stay in the home or not. If you owe $600K on a home that's valued around $300K, it's a Little difficult to substantiate getting your loan modified. Being that Principal Reductions are few and far between, if the lender lowers your rate and defers your past due payments, you're still going to be in a horrible equity situation. Granted.....if the payment @4% on $600K is the same as $300K @ 11%, then it still makes sense to stay in the house (especially if your only option is to rent for only a few hundred dollars less). I'll be the first one to advise you to just let your house go if it makes sense in the long run, but don't get baited into thinking that doing a short sale or bankruptcy are your only options.
What Am I Looking To Accomplish?
We get quite a few customers that are looking to "sue" their lenders and/or go right to doing an Internal Loan Doc Audit. We addressed these issues in last weeks blogs, but let's touch the surface again. For most people, their ultimate goal is to come to reasonable terms with their lender that they can afford, and still keep their house. However, it's very easy to get "sold" into thinking you have a chance of getting your home for free. If you are not behind on your payments, you have a 4% rate, and your payments are already well below 31% of your gross income, then chances are that you are not eligible for assistance. If you are behind on your payments and/or have a higher or adjustable interest rate, and have a verifiable hardship, then you stand a pretty good chance of getting something done. The question is what are you trying to get done? Again, for most people if they can simply get their past due payments put on to the rear of the loan, and get the payments to where they can make them, they are more than happy. Remember, "If it sounds too good to be true, it usually is".
If The Lender Accepts and Lowers The Payments, Can I Still Afford Them?
Any legitimate loan modification company is going to ask you this question before they even offer their services. If they're not asking this question, you should probably be pretty concerned why they aren't........This is ultimately what you, the lender and your company should be looking for. For instance, if you bring home $3000 a month, and after your mortgage and your other living expenses you spend $3800 a month, even with getting a $500 a month reduction from your lender, you would still be in a position where you couldn't afford the payment. On the other hand if you bring home $3000 a month and your expenses are $3000 a month, then if the lender drops your payment, you'll have a $500 surplus every month and can reasonably show that you can make that payment. It has to make sense to the lender, and it should certainly make sense to you as well.
I Want Help, Should I Find a Legitimate Loan Modification Company, or An Attorney?
The real answer is neither. It is next to impossible for you to do the research to find your own legitimate loan modification company. For the time you would spend and the risk you would take, you'd be better off just trying to negotiate yourself. Other than charge you more and not be bound to state regulations, there is NOTHING that a "loan modification attorney" can do for you that a legitimate company cannot do for you. So What Do I Do? PMC has researched thousands of mortgage professionals to find Negotiators that have top notch performance, reputation, and overall service. Furthermore, they are licensed and comply with state and federal regulations. PMC has multiple Negotiators in various states, and with our proprietary software we ensure that our customers and their Negotiators are always on the same page, and no matter what happens you are protected along the way. Why play Russian Roulette with something as important as your home? Don't take chances, contact PMC today and see what makes us different.