Loan Modification

The recent recession brought a lot of financial problems to a lot of individuals, including homeowners who have existing loans to pay. Banks offered many an option for loan modification, to save homeowners at risk of delinquency, or those struggling with changes to income or losing their home equity.

This article gives information to those who are looking to move and get a new mortgage, but already have existing loan modifications:

Explaining Loan Modification

Basically anything that changed what was originally agreed upon in an existing mortgage and that restructured a part of the exisiting loan, most modifications reducing the amount of mortgage payments to be made.

When to Do What

The timing is also crucial when doing a loan modification: ordinary loan guidelines state that from the time of modification, homeowners should have 2 years of payment history on the property where the homeowner wants to apply for a new mortgage on; or 1 year of payment history to finance a new property. However, those who have a history of loan forgiveness or a mortgage write-down are then not eligible anymore for the usual mortgage loan. If the payment was only reduced and not forgiven, and the homeowner has had either the 1 or 2 year rating, then financing should be available regardless of the financial situation of the applicant.

Check the Homeowner’s Credit Report

Banks and other lenders review all applications based on a person’s credit report. Therefore, what was reported on the loan modification also plays a huge role: normally this is reported to be a “restructured” or a “modified mortgage” on the homeowner’s credit report. Should the second be the case, but this was not reflected on the credit report, this is an advantage for the homeowner. In any case, make sure to show a detailed copy of the modifications made on the loan. This is because other lenders define restructured or modified mortgages differently than for example, how Fannie Mae and Freddie Mac would interpret it to be. Therefore, the homeowner has in this case some room for leeway. After a restructuring with a lender, the homeowner has to sign new paperwork with all the terms and conditions of the restructured loan. Should there be no new signing of paperwork required, but a change in the loan took place, it will then still be reported to the credit bureau, but documenting what was modified on the loan is not required and the homeowner also does not have to wait any longer.

Otherwise, the waiting times should not vary because banks that bundle and sell these loans follow the same guidelines. Bigger banks may need another round of inspections to avoid loans that are high risk.

Homeowners who have been rejected due to existing loan modifications should ask for another opinion. Approach mortgage banks where availing a loan are more feasible, for example those that work closely with Fannie Mae and Freddie Mac.

The hard times should not mean the end of plans to modify existing loans and acquiring new property. By keeping with the monthly payments, many options exist for homeowners who truly deserve the loan modification.

What Is Home Mortgage All About?


Home mortgages are utilized by individuals to buy a house. It acts just like security for your loan. Mortgages are repaid over time and comprise interest money as well. The rate of interest is based on the type of mortgage, the present market scenario, and various other aspects. Obtaining home mortgage is a prolonged procedure and getting a financial expert or a broker can be comforting.

Mortgages are typically procured by people for different requirements – to obtain a new home, pay down overheads, to assist monetary obligations, etc. Numerous Banks and lending institutions – both private and government approved, provide home mortgage credit that folks can get to purchase a new home. Before looking for a home mortgage, you must know how it functions, what the price ranges are, how much amount you are qualified to obtain and about the monthly installments.

Mortgage Calculator

A mortgage tool called mortgage calculator aids an individual to determine all the above amounts. There are actually diverse unpredicted scenarios that you will want to think about. Just for instance, you are sick and drop your job. Will you really have sufficient money or insurance plan to take care of your mortgage payments?

A mortgage calculator is normally found in the web pages of home loan organizations. You will be requested for details like the cost of the home you intend to acquire, time period of the credit, the rate of interest, income details, etc. As soon as you input these figures, the calculator provides you with an approximation regarding the volume of money you should pay out on a monthly basis.


Additional you will be provided with a comprehensive clarification about the ways in which these numbers were arrived at. If you choose to call for any more explanation, you will find willing representatives of the firm, who will make clear all details for your requirements.

There are various kinds of home mortgage loans at your disposal. Make use of a mortgage calculator to have your numbers right, take a little time to look around and comprehend about the several types of mortgages as well as what will meet your needs the best before you apply for one.

Private Mortgage Insurance

If a loan taker encounters that he does not possess the cash to settle the mortgage down payment, he has the means to apply and obtain personal mortgage insurance. The sum is approximately 25% of the price of the house, and he need to pay insurance premium for the money. The lender is protected from the loan taker, who defaults on transaction money transactions by the private mortgage insurance.