You’ve likely heard about loan modification while reading a magazine, blog post, or guide. Regardless of where you first encountered the term, you may be wondering what it actually means and whether or not there’s any benefit to loan modification. Well, we’re going to explain all that and more in this post. There are different approaches that one can take with a loan modification. A common type is where the term is extended in order to reduce the mortgage payments.
That being said, it isn’t the best way to go if you’re trying to pay your home loan off faster. It’s worth noting that loan modifications won’t reduce your principal balance — the total amount owed — but they can still reduce your interest rate which will make it easier to pay the debt off. There are some banks that will actually raise your interest rate if you go for a loan modification so it’s essential that you know what you’re doing before attempting this. Short sales can’t be processed at the same time as a loan modification so you’ll have to pick one or the other. That’s all for now but we hope that this post has helped you out!