When Do I Need A Modification

I get asked this question every single day, by potential clients, friends, relatives, and people I meet in my day to day life. The short and simple answer to this question is now. Of course that comes with caveats and stipulations, but the crux is that if you are asking the question seriously, then you should probably be actively seeking a modification of your home mortgage. Following are some facts about modifications that you may or may not already know.

Fact: If you are struggling to make your mortgage payments every month, you should try to get a modification. Even if, up to this point, you have been on time, and haven’t missed any payments, it’s possible to have your loan modified. What you need to show the lender is a likelihood that you will default or become delinquent. I know folks with perfect payment histories that have gotten mods, because of some change in circumstances that demonstrated that they may not be able to pay the mortgage in the future.

Fact: If you are currently behind, you should already be in the mod process. The more payments you miss, the further behind you get, the harder it is to catch up. Not to mention the damage done to your credit rating. The sooner you get the ball rolling, the sooner you will have a resolution, one way or another.

Fact: If you have an adjustable rate mortgage (ARM), weather or not you r are having problems making the payments, you should be applying for modification. The fact is that the lenders today are really more than willing to modify ARMs to fixed rate mortgages just to offset the possibility of future default. Break your ARM.

Fact: Finally, modification is not for everyone. Some people will never qualify for a modification, no matter how hard, or how often they try. If you are in a fixed rate loan, at 5%, for a 30 year term, and have stable income that keeps you ahead every month, the chances of getting a lender to modify your terms are Slim and None, and Slim left town. But you should still give it a shot. The worst thing that can happen is the lender denies the mod request, so you have to keep the terms that you aren’t having trouble with anyway. But on the other hand, they might give you a better deal, just to get you out of their way.

If you’ve read this far, you probably need to start the process. At worst, you request is denied, and you remain where you are. At best, well, experience says that if you want to win the Lotto, the first thing you have to do is buy a ticket.