If your financial situation has changed, your property value has decreased significantly, you are late in your payments or having a hard time making the payments on your mortgage, you may qualify for a loan modification. If your lender approves the modification, the mortgage payment and interest rate may be reduced and foreclosure can be avoided. Sometimes the principal is also reduced.
A. A loan modification is a change approved by your lender and yourself to your mortgage. The changes can range from changes to your interest rates to reduction of your principal balance.
A. No. Although you will need to show financial difficulty and that defaulting on your payments is impending, you do not need to be behind on your payments to qualify for a loan modification.
Q. If my credit is bad will it prevent me from being approved for a loan modification ?
A. Approval of loan modification is not based on credit and being approved for a loan modification will not affect your credit.