Struggling to pay their mortgages because of job loss or pay cuts, many homeowners are looking for every option out there possible to avoid foreclosure. Can mortgage modifications hurt, or help your bottom line?
Terry Bloom says a loan modification is different than refinancing. When you modify your loan, you permanently change the terms. It can lower your payment by anywhere from 10% to 50%. However, Bloom says only some modifications make sense. For example, a company that looks at your finances and sets up a temporary situation where you are comfortable making the payments? That’s actually good. Bloom says beware of agreements where your lender will take the payments you can’t make and divide it by twelve with the extra amount getting tacked onto what your currently owe. According to Bloom, that is nothing more than putting a band aid on a broken arm.
If you’re having trouble making payments, contact your lender right away. They’ll likely be willing to work with you.