Loan Modifications - How to Modify Your Own Mortgage Without Hiring a Professional

As a Mortgage Loan consultant for the past 20 years, I have helped countless borrowers obtain financing for the purchase or refinance of their home. Within the past 12 months a new field has emerged called Loan Modifications. A loan modification is simply a restructuring of your current loan. As the market is starting to change, many consumers are stuck in high interest rate loans and are unable to refinance to a lower rate. The reasons range from poor credit, reduced income or lack of equity in their home (being upside down). A loan modification is an alternative (solution) for those who can't qualify for a refinance. In addition, a modification can help if you are behind with your mortgage payments and just can't get caught up.

If you have a high interest rate, are behind with your payments or in an adjustable rate mortgage, this may be an opportunity to lower and stabilize your payments. It is almost impossible to turn on the TV or radio and not hear an advertisement for a company willing to help a consumer modify their loan. The typical cost to do this is $1,500 or more. Unfortunately, many of these companies have only started operating within the past 6 months and already have poor ratings with the Better Business Bureau. This has also been an opportunity for scam artists to steal money from consumers who are desperate to save their homes. Although professional services can be helpful sometimes, they really are not necessary. If you are looking to negotiate with your bank, here are a few things and some tips that you can try before contacting a professional service:

1 - Call your bank and ask to speak to the Loan Mitigation Department. Don't waste your time trying to explain your problem to the customer service representative.
2 - Be prepared to explain to the Bank that you have a hardship. More than likely you will be required to put the hardship in writing. Examples of this would be a reduction in pay, increase in your monthly expenses (medical bills, food, utilities etc). You might also be in an adjustable rate loan which has recently increased. All of these are valid hardships. Avoid mentioning things like 'I recent purchased a new car and the payments are too high', or 'we just came back from a big vacation'.
3 - Be prepared to supply the bank with a financial budget. They will usually ask you to complete budget of your monthly expenses. Since this is subjective, be as realistic as possible. If your expenses are too high or too low relative to your income, you may be denied for the modification.
4 - Be patient as the process can sometimes take up to 3 months to complete, even for a professional.

Don't be afraid to contact the bank. You have nothing to lose and everything to gain. The process is not complicated, but you need to have an understanding of everything. If you decide that you want to use a professional service, here are some tips:

1 - Check the company out on the Better Business Bureau. See how long they have been in business and check their rating. You would be surprised at how many companies already have poor ratings.
2 - Make sure that they offer a money back guarantee. As this business is now becoming competitive, many companies are now offering a money back guarantee. If the company you are considering does not offer one, keep looking.
3 - Beware of companies that are promising that they are going to lower your rate to 4% before they take on your case. The fact is that modification companies are not the ones who are determining your ultimate rate, the lender is doing that. The modification company is only there to represent you and do the work for you.

Some people prefer to use a professional service, however it is really not necessary. If you have a little time to invest, you could save $1000's and achieve the same results that the professionals do.

Joseph Pisicchio is a mortgage professional with over 20 years industry experience. Working for both large institutions (Chase Manhattan Bank) and small Banks. He has compiled everything that he has learned in the mortgage and modification business in 20 years into a book that teaches everything from finding a mortgage, to modifying the existing one that you have. http://www.mortgageloanmodificationsecrets.com

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