If you live in Idaho and are having a problem paying your mortgage, there are many benefits to loan modification. Loan modification is a process in which your lender agrees to alter the terms of your existing mortgage loan. This may involve changing the interest rate or term of the mortgage to lower the payments, or changing the mortgage from an adjustable rate to a fixed rate. It may also involve lowering the balance due. Loan modification can save you from foreclosure and other legal actions in Idaho.
What is the Difference Between Loan Modification and Refinance?
If you refinance your loan, you apply for a new loan to pay off your old one. You have to qualify for this new loan by having:
- Good credit
- Sufficient equity in your home (i.e. not refinancing into a loan that is equal to 80 percent or more than the value of the home)
With a loan modification, on the other hand, you are just changing your loan instead of getting a new one. You may not need to meet the same qualifications as a refinance.
Loan modification has become more possible in the wake of the financial crisis of 2009. The federal government instituted incentives to allow mortgage lenders to restructure or modify loans in order to help save homeowners from foreclosure. Many lenders are also more amenable to a loan modification because they don't want to foreclose and end up with a house they can't sell for what it is worth.
Benefits of Loan Modification in Idaho
One of the major benefits of loan modification is you can avoid foreclosure. In Idaho, the deed of the home is considered to be held in trust until the mortgage is paid. This results in lenders being able to do a non-judicial foreclosure. That means they don't have to go to court to take your house if you can't pay. By modifying your loan and making the payments affordable, you can avoid losing your home and destroying your credit in the process.
Idaho also permits deficiency judgments, which means if the money from the foreclosure sale doesn't pay off the full amount you owe the bank, the bank can sue you for the difference. By getting a loan modification, you can avoid this additional financial risk.
Getting Help
An experienced real estate or foreclosure attorney can assist you in negotiating a loan restructure with the bank. Consider contacting an attorney who can help you understand your rights and options to save your home.
