Avoiding Chapter 13 Bankruptcy With a Loan Modification and Short Sale
What is a Short Sale and Loan Modification?
Homeowners who are struggling financially and unable to make their mortgage payments may wonder what, if any, solutions are available to them. Although filing for Chapter 13 bankruptcy might at first seem as though it would be a viable way to avoid foreclosure, it may not always be the best financial solution. Depending upon your personal situation, there are two other solutions that can be utilized. These two solutions are loan modifications and short sales.
Loan Modification
The process of modifying a loan can be successfully used for homeowners who are facing foreclosure, but who wish to keep their home. By modifying your mortgage loan, you will be able to permanently change the terms of your loan. Through this method, it is possible for the mortgage to be reinstated and for more affordable terms of the loan to be arranged. Such term changes may include negotiating extensions for payments, more favorable interest rates, extending the term of your mortgage loan, working out a reduction in the balance of the mortgage, waiving accrued interest and substituting a fixed interest rate for an adjustable interest rate.
Through these effective loan modification strategies, it is entirely possible to lower your monthly mortgage payments to an amount that is more affordable, allowing you to breathe easier financially and remain in your home while avoiding foreclosure.
