If a homeowner wants to stay in their home and avoid a foreclosure and a short sale, an option is loan modification.
Former President of the Realtors Association of the Palm Beaches, Bill Richardson, says loan modification could mean getting a reduced interest rate, extending the length of a mortgage to make payments more affordable, or possibly changing the principle balance.
"Almost anything can change, it's what the lender is willing to change," explained Richardson.
Changing expectations from a lender can be easier said than done, and a loan modification is not for everyone.
The changes of a loan can affect a homeowner for decades beyond what they had originally anticipated. Part of the new deal may be that payback to the bank is going to be the full investment, plus some. The agreement is that the bank will allow you to stay and pay your mortgage at a lower rate, for example.
As with any important financial decision that affects your future, consult with experts. Richardson suggests every homeowner seek the guidance of a trusted real estate agent before taking steps towards any important change.
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