With all the talk in the current housing crisis, it is easy for a person to get lost. And because a house is usually a person’s biggest investment, being lost is scary. Are you worried about losing your home, but not sure where to turn? Are you wondering about things like a loan modification and bankruptcy? Worry no more, because help is on the way.
A loan modification is when any changes are made to the payment amount, duration, or interest rate associated with a mortgagor’s loan. These modifications are becoming popular due to the financial difficulties many in the country are facing. The loans are often needed when someone is unemployed or underemployed.
A bankruptcy is a clearing of debt. Whatever the person owes is either written off, or else a portion of debts owed is paid back on an installment basis. Bankruptcy affects all debt, not just mortgage loans.
If you are in financial difficulties and are not sure which one is right for you, be aware that there are some major differences.
Understand that applying for bankruptcy will not make your mortgage company more willing to offer you a loan modification. Despite what you hear, you can most definitely wind up losing your house. Always check and double-check before you choose the drastic measure known as bankruptcy.
A loan modification affects your credit, but not nearly as much as a bankruptcy does. If you are already behind on any of your mortgage payments, you might not have an option at this point anyway. A loan modification might be a necessity in order to bring your loan current and to avoid the risk of foreclosure.
You might be able to get a loan modification that will bring you current with your payments and will give you a lower interest rate. This is probably the best case scenario. Whatever you do, don’t bury your head in the sand. Many people find financial difficulties so stressful that they remain inactive. This is the worst thing you can do. Whether it is a loan modification or a bankruptcy, make the phone call now. The help you need is available, you just have to reach out and take it.