Loan Modifications

Loan modifications are also known as restructured mortgages. These are loans in which the original terms of the agreement have changed, so the debt is then restructured.

Typically loan modifications have to do with rate and payment restructuring when borrowers are unable to refinance.

It is important to remember that loan modifications are different from mortgage refinancing. Loan restructuring will change the terms of your original mortgage. Refinancing pays off your original mortgage loan, giving you another mortgage loan.

The Bottom Line

If you have a loan modification in the past and you are looking to get a new mortgage, you need to know that certain rules apply to your situation.

To be eligible for a new mortgage, you must have made at least 24 mortgage payments since your loan restructuring was completed. Even if you had a second mortgage in place when you restructured, that same 24-month time frame applies, no matter whether the home was a primary or secondary home (or even an investment property).

If you are purchasing another property independent of the property that has a restructured loan, then a one-year waiting period will apply.

If your previous loan modification was subject to forbearance, or if there was a principal balance forgiveness, it will be up to the new mortgage company to approve your loan.

Should You Modify or Remortgage?

If you are unsure whether to modify your mortgage or refinance, you may want to consult a loan modifications lawyer in Miami-Dade, Florida.

If your current mortgage loan company offers you lower monthly payments, make sure it is a refinancing offer rather than a loan modification. You should get the figures in writing, so that you can consult with a lawyer to verify.

In order to maintain your credit standing, it is often better to refinance rather than restructure. However, if refinancing is not an option for you, it is important to remember that your future mortgage options will be limited for the next two years with a restructuring.

Lenders will report restructured mortgages to credit companies. Sometimes a restructured mortgage can be a red flag to new lenders.

First Legal

If you have had a home loan modification and are looking to buy a new home, you may want to look into loan modifications law in Palm Beach, Florida. It is also important to look at your credit report before you apply for a mortgage, to ensure there are no errors or problems that need to be resolved. If you have any questions, please contact the friendly legal professionals at First Legal. We would be happy to help you.

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