Mortgage foreclosures hit an all time high in the first quarter of 2009. More Americans than ever are loosing their homes to foreclosure. With real estate values where they currently are and many homes values have fallen below the amount they are financed for, leaving the homeowner "upside down" on their mortgages. Another major factor contributing to the high amount of foreclosures is that a lot of homes were purchased with Adjustable rate mortgages, the rates of these mortgages have sky-rocketed and as a result have caused the owners payment to increase by more than $500. Many homeowners are now being faced with monthly payments they simply can not afford. While the fed has attempted to keep mortgage interest rates low to encourage refinancing, many of these home owners that are facing foreclosure can no longer qualify for foreclosure. However this does not mean that the distressed homeowner does not have any options. There is an alternative to foreclosure that will allow you to save your home. This is through successful negotiation of a home loan modification. A loan modification can in many cases be the answer to the problem. Like anything else there are benefits and disadvantages to a mortgage modification. We have compiled a list of the advantages and disadvantages for you to consider. ADVANTAGES: A successful Loan Modification will supply you with the following: 1. an interest rate reduction. Under President Obama's current program this rate may be as low as 2%. 2. The advantage of having the reinstatement amount (total amount of late payments) deferred to the back end of the mortgage and added to the current principle. 3. A reduction in the actual principle balance of the loan 4. Has many of the same features of a refinance, without the high cost. DISADVANTAGES: 1.You only get one shot at the Loan Modification so you need to get it right the first time. It is important that you make sure your mortgage modification sets up payment perimeters you can afford. 2. Your mortgage company does not earn money making you modifications so they will most likely offer you terms that are not actually helpful. 3. Due to the high rate of foreclosures there are an abundance of scams out there set up to take your money, that promise to help you with negotiations. To avoid these scams NEVER PAY A DOWNPAYMENT TO ANYONE OFFERING TO ASSIST IN A MORTGAGE MODIFICATION. A mortgage modification can be a very useful defense to avoid foreclosure you should strongly consider the above advantages and disadvantages if you are in fear of loosing your home.
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