There are subprime loan modification options available for homeowners who do not have credit good enough to qualify them for standard loan modification. If you are a homeowner with bad credit, a subprime may be your only option for modification assistance. They should only be considered if you have not been approved by a standard lender for a loan modification agreement.
Subprime loan modifications generally carry a much higher interest rate than other modifying agreements, though they last the same five year duration that standard modifications follow. With the American economy in shambles, there are millions of Americans looking for a way to afford their monthly mortgage payments on top of their bills. As it stands, the current financial situation gives several homeowners no other choice but to opt for a sub-prime loan modification. Homeowners from all walks of life have to turn to their lenders for a modification and the guidelines for who is approved and who is not are strict.
In general sub-prime modifications are more harmful to the homeowner than a standard. They tack on a higher interest rate because the homeowner has no other choice in the matter if a standard lender will not accept their agreement. The lower mortgage payments that offer are helpful for only a short period of time. Most of what the homeowner is paying for the duration of the modification agreement is interest, and the interest plus the amount for the mortgage itself stacks up to be much higher than the full cost of the initial mortgage.
As a homeowner, you need to keep yourself informed and research the home loan modification guidelines in your state. Some states are less rigid than others, if only by a marginal amount. Try your hardest to reach a loan modification agreement with your initial lender, and even consider hiring a loan modification attorney to help you. A loan modification attorney can increase your chances of being approved substantially, and many firms do not charge you for the initial consultation. Take your chances with your lender, by yourself or with an attorney, before considering any form of subprime loan modification agreement.
If you are approached by a sub-prime loan modification lender, do not accept it with open arms. Scrutinize the legitimacy and terms of the agreement presented to you and consider whether it is really worth it or not. In some cases, the terms are so unfavorable towards the homeowner that it is just better to stick with your initial mortgage and scrap together. Subprime loan modifications are known for also being predatory, which means the odds are in the lender’s favor, not yours. Closely examine and exhaustively try all options before resorting to a loan modification agreement.