If you have an existing mortgage loan, you might come across of the term “Loan Modification”. It refers to the conditions usually offered by mortgage lenders which change the existing terms and conditions of a mortgage loan.
It may redound to your benefit while in some instances, it may not.
Do not immediately concede to loan modifications. Think many times first. Be careful of many scams in disguise of a loan modification.
Below are 3 things you should watch out for when you are offered a loan modification:
- Watch out if you are made to pay processing or upfront fees. Mortgage lenders sometimes offer loan modification to borrowers through e-mail. The offer appears to be legitimate. You may easily get trapped by their fantastic offers.
However, if they require you to pay upfront fees before they can process the loan modification, it should invite doubt to your mind. Always be warned every time you were required to pay upfront fees. Most likely, it is not for your advantage.
- Be careful of the lower interest rate they offered to you. When you read first the offered lower interest rate, you might be carried away immediately.
Of course, a reduced monthly amortization is really good news. However, you should think twice. The mortgage lender might offer you a lower interest for several years but later on you are required to pay the remaining balance all at once.
- Be warned of computer-generated loan modification offers. There are many mortgage lenders nowadays which use this strategy.
They send unsolicited computer generated offers through e-mail to different accounts. Each account has a different offer which entices the borrower to change his loan terms.
However, when you inquire the bank regarding the offer, they would say that they have no idea of your query. No one can ever explain to you anything about the computer generated loan modification.
It is really a wise idea not to jump immediately to lender’s fantastic offers through loan modification no matter how enticing they may be. It might not redound to your benefit in the end.