We recently had a client sign off on a mortgage modification. This modification got their mortgage out of default and saved the home. These are the success stories that give us immense satisfaction!
Loan modifications Explained by New Jersey Foreclosure Attorney
A mortgage loan modification is a financial tool you can use if you are struggling with your mortgage payments or if you have already fallen behind. The goal of a mortgage modification is to get you caught up on late or missed payments and make future payments more manageable. There are different ways to modify your mortgage to allow for lower payments.
Typically, any unpaid mortgage payments, interest, fees, or late charges are added to the principal of the loan. This is known as the capitalization of arrears. The intention is to give the owner a fresh start in keeping up with mortgage payments. Sometimes, a modification will set up payments to remain low upfront with a balloon payment at the end. Other times, the modification will allow for some amount of principal forgiveness.
Most often, the entirety of the loan is recast based on what you still owe. So if you still owe $100,000 on your home, this amount will be recast based on a new 15- or 30-year loan. A recast will significantly lower your monthly payments, although it will take longer to pay off your mortgage. For example, our recent client is in his 80s. His mortgage was recast for 30 years at 3.65%. He asked a good question: how does my lender know I will be around to make these payments for the next 30 years?
Jokingly, we surmised that his lender must know the location of a fountain of youth (and we definitely want the details). Our client promised to make every payment down to the last one if his lender could promise he would be around for another 30 years!
Bottom line: the mortgage modification will allow him to manage his mortgage payments while on a limited income so he can have peace of mind in his golden years. While mortgage modifications for seniors can be more complex, we know how to get them done.
If you are in default on your mortgage, many programs are in place to help you modify your loan. We have a significant amount of experience with traditional loan modification programs. New Jersey also has a new program in place meant to help homeowners impacted by the pandemic. Mortgage modification is a great tool to help you prevent foreclosure or bankruptcy.
If you are struggling with your mortgage payments, don't wait until it is too late. We can guide you through the proper steps to get your mortgage back under control. There are a lot of laws in place to protect NJ homeowners, but the process can be daunting for the average person. We know what lenders are looking for in a loan modification application. We can give you your best chance at getting your loan modification accepted.
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