Are you having trouble catching up with your loan payments?
If yes, why not try speaking with your lender to request for loan modifications on your repayment terms. In fact, this is the best step that you can do to avoid worsening the problem. Do not wait until you receive a notice of foreclosure before trying to negotiate.
Some people may think that they will get a negative response from their lender. However, there are many false beliefs circulating among consumers regarding loan modification which could be preventing you from making a positive move.
What are these common beliefs?
My credit rating is too low to qualify for modification.
Indeed, having good credit is your best asset when attempting to negotiate. However, just because you have a low score doesn’t mean you shouldn’t try. Speak with your lender to let them know why you are unable to submit your payments on time and that you are doing your best to stay true to your obligations.
It’s better to declare bankruptcy than to seek loan modification.
Bankruptcy should be the last result when facing foreclosure. a record of bankruptcy is a very derogatory remark and will remain in your credit report for 7 years. Therefore, you should do all possible options before considering the possibility of filing for bankruptcy.
Lending companies do not offer loan modification.
This belief can’t be farther from the truth. Many lending companies have modification programs prepared for borrowers who are having a difficult time with their loan payments. In fact, many lenders will prefer to help a borrower by modifying the loan terms rather than push through with the foreclosure process.
You should only seek loan modification when facing foreclosure.
You don’t need to wait until you are facing foreclosure before seeking out loan modification. If you are experiencing financial crisis or if you encountered an unfortunate situation such as a sudden loss of job, a decrease in your earnings, sickness, injury, divorce, etc.), you should immediately speak with your lender and request for modification of your loan’s terms.
Loan Modification will damage your credit rating
. Modifications, like loan refinancing should not dramatically affect your credit score as a record of foreclosure or bankruptcy would. As you continue to submit your loan payments on time, you can improve your credit score within a few months after modification has been made.
Once a foreclosure notice has been sent, there is no other solution.
If you have received a notice of foreclosure from your lending company, seek out to negotiate for a loan modification right away. Many lenders will gladly modify their terms rather than continue with the process foreclosure. However, you must act quickly before the foreclosure process starts.
