Loan Modifications, Do They Work?

http://realestategroup316.com/
Hello, we are Real Estate Group 316, one of the leading short sale groups in the Columbus area. I'm Kimberly and this is Sheri. Today we wanted to discuss a few frequently asked questions.

One question we get quite a bit is, "Should I do a loan modification instead of a short sale?" In theory, a loan modification may seem like a good idea, but in reality they don't work very often. There are a very small percentage of loan modifications that are successful because it's just a temporary fix. What happens in a loan modification is you contact your lender and they will allow you to apply for a loan modification. That process can take up to 12 months just to get into a trial period. They basically reduce your interest rate to reduce your payments. Loan modifications aren't permanent because what really happens is the money that you are supposedly saving every month gets added on to the end of loan so you end up owing more and you have a longer mortgage. If people do get into a trial modification, what we usually see is the money they are saving isn't enough to help them out and they end up doing a short sale anyway.

Our next question is "Can I lease out my house while I wait for my short sale to be approved?" Our recommendation would be no and that you stay in your home until the short sale is completed. Some banks may even foreclose on your house if you move out. If you have a renter and they are paying their rent, what do you do with their payment; keep it or pay your mortgage? Also if you have a renter, they have tenant rights and you never know if they will move out if you need them to.

Our last question is, "Why shouldn't I just let my lender foreclose?" There are a lot of reasons why you don't want to do this such as deficiency, it can affect your credit, or your security clearance for a job now or in the future. A short sale is a much easier way to go to protect yourself in the long run.

If you have any further questions on any of the information we have covered today, or if you would like more information on short selling your home, please feel free to contact us.

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[RussRavary]

Great information on loan modifications