What is loan modification and how much does it cost compared to a refinance?
August 24th, 2009 by Lenny
Is it easier to modify a loan if you don’t fit the underwriting guidelines for an FHA refinance?
Not in foreclosure; just have a high-interest rate ARM and too high of a DTI.
Thanks for your input.
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Well, if you have an adjustable rate loan getting ready to reset to a higher rate and your income is in jeopardy of not supporting it you should be eligible for a loan modification. It is one of the criteria to qualify. If you owe a lot more on your home than it is worth, you are eligible.
Is it cheaper? well, it could range from $900 to $3,000 and then there are some real sharks out there trying to get $5,000 to $7,000 Wow. those people are just slime.
Yes, you can go with LoanSafe and learn how to do it yourself, buy a loan modification kit for $200 or hire a company/attorney to do it for $1,000 to $2,000.
They claim the professionals get you a better rate in the 3’s or low 4% range than if you were to do it yourself. But that is debatable.
It is your choice and it really depends on your current loan servicer as to the leverage you have or don’t have. I do think some companies promise you the world but overall they do get you a modification, maybe not principal reduction in all cases.