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How can I get a home loan modification?

A loan modification can be a very effective way to avoid a foreclosure on your home, and you might be surprised by how willing your bank is to negotiate a modification with you. In fact, banks don't want to foreclose on your home -- they'd rather profit from the interest paid by your successful completion of your mortgage payments. As such, banks are often willing to work with borrowers in order to keep people in their homes, and keep them on track with their payments.

Here are a few tips to help you get the loan modification you need to prevent foreclosure:

Talk to a housing counselor or real estate lawyer

A housing counselor or real estate lawyer can represent you in your dealings with your bank. Your representative will know what kind of a counteroffer could work in the event that your initial request is denied. Your representative should also understand what kind of modification you should be able to get given your situation; as such, they can request exactly that kind of deal when responding to the bank.

Make sure your modification is realistic

Don't simply accept any loan modification you can get. If the deal isn't good enough to allow you to continue making your payments, then you shouldn't accept it. Remember, you want a loan modification to avoid the risk of foreclosure, so if you can't keep paying your payments, the deal will not work.

Keep your expectations realistic

The best you will be able to get is a fair and reasonable offer from your bank. It's not likely that you'll be able to get a deal that lowers your monthly obligations below 31 percent of your monthly income prior to taxes. That said, you may not even be able to get that.

The fact is, a loan modification can help some avoid foreclosure, but for others, other strategies will be more appropriate. Be sure to understand all of your options fully before selecting the best foreclosure prevention method to suit your needs.

Source: Bankrate, "5 steps to a successful loan modification," Holden Lewis, accessed Jan. 04, 2018

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