Types of Mortgage Loan Modification in Florida
Mortgage Loan Modification in Florida
Homeowners facing foreclosure have options to avoid or even stop foreclosure and save their homes. These options include short sales, bankruptcy, and mortgage loan modification. Mortgage loan modification helps homeowners save their homes by restructuring their existing mortgage into smaller more manageable monthly payments. Lenders are willing to work with homeowners with a loan modification as foreclosure is a costly process and lenders can lose money on homes whose value has decreased. Though a homeowner must prove that they will be able to handle the new payments and agree to the new terms to make sure they do not default again on their payments.
Several types of mortgage modifications are available. Getting in touch with your lender or loan servicer can help determine which mortgage loan modification in Florida will work for you.
Capitalization of Arrears
When a homeowner misses a mortgage payment they are now considered to be in arrears or delinquent. One-way lenders can modify a mortgage loan involve capitalizing on the arrears by rolling them into the principal of your loan. This process allows homeowners to become current on their loan and no longer appear to be in arrears or delinquent. Capitalization of arrears stops payment collectors from coming after homeowners and can be a great mortgage modification solution if your financial troubles are only temporarily and you will be able to begin making regular payments again immediately. Talk with your lender to find out what your options will be for a mortgage loan modification in Florida.
Another possible option for mortgage loan modification in Florida is a Rate Reduction. Lenders can reduce the interest rate on a homeowner’s loan facing financial troubles allowing the homeowner to pay smaller monthly payments. An interest rate modification can be short-term or for the entire life of the mortgage. With a short-term interest rate modification once the rate reduction period has ended, the original interest rate will return, and monthly payments will return to normal. This is ideal if the lower payments allow you to save your home and become financially stable once again before going back to your regular mortgage payments. An interest rate reduction that lasts for the life of your mortgage will reduce payments until the mortgage is repaid in full. Typically, this option is only available to people whose ability to repay the loan is not expected to return fully. The only way to be certain of this is to check with your lender if this is a viable option for a mortgage loan modification in Florida.
By utilizing this method lenders increase the time left to repay your mortgage. Term extensions use the extra time to repay the loan to stretch out what is left meaning you the homeowner pay a smaller amount per month but more in interest over the long term. So for example, if you had $85,000 remaining on your current mortgage and 10 years left to pay, a homeowner can stretch those payments to 20 or even 30 years making the payments more manageable.
Principal forbearance is when a lender agrees to move a portion of the principal of your loan to the end of your mortgage contract. The reason this helps a homeowner is that you now only make monthly payments based on the new amount minus the amount moved to the end of the loan. Another advantage to this method is the amount moved to the end of the loan doesn’t accrue interest, but it will be due in full when you pay off or refinance your loan.
What to Do
Foreclosure is a tough and long process. Hundreds and thousands of family’s faces foreclose in Orlando every month. When caught in this situation a good first step is to reach out to your lender to figure out what options are available to you. Ignoring or hoping the problem will fix itself or go away will only make the problem worse and put yourself further in debt.
Want to learn more about mortgage modification in Florida? Go here to get in touch with us and see how we can help you! 407Foreclosure Help has been helping individuals and families in Orlando for over 10 years learn their options. We offer the ability to buy your home in a direct sale, list it in a short sale, or give you the knowledge you need when facing foreclosure. Learn about your options. Preserve your credit.
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