Loan Modification and Secured Loans: What You Need to Know
Home>Loan Modification and Secured Loans: What You Need to Know
People with debt problems seek debt solutions. While being able to apply for a loan is, at one moment, much-needed financial assistance, eventually, you will have to pay back the money you owe. A loan is when money is given by a creditor (person, bank, or any financial institution) to a debtor in exchange for repayment of the loan principal amount borrowed plus interest. There are different types of loans such as secured or unsecured loans.
A secured debt or secured loan requires you to offer something you own of value as collateral, in case you cannot pay your debt. It comes in multiple forms such as home mortgage loans, car loans, and secured credit cards. In contrast, unsecured debt or unsecured loan allows you to borrow money based on your creditworthiness, good credit score, and decent credit history with no collateral. It includes student loan debt, unsecured credit card loans, and unsecured personal loans.
Loans are useful for major purchases, renovations, business ventures, debt consolidation, and investments. It helps in improving the overall money supply in an economy and opens up the competition by lending to new businesses. The fees and interests acquired from loans are the main revenue source of banks and even retailers that use credit facilities and credit cards.
Both parties must agree with the terms and conditions of the loan including the loan amount, the maximum amount of interest rate, collateral, loan payment plan, and length of repayment time before releasing any amount of money. If the lender demands collateral, it has to be mentioned in the loan documents.
When you struggle financially and if you fail to pay off your loan debt according to the original payment agreement, you may request a loan modification. It involves a change to the original terms of your loan. In situations of possible foreclosure or charge-off of the debt, the option of loan modification can be less costly to the business.
Lenders can make amendments on the terms of an existing loan such as opting for lower interest rates, extending the debt repayment time frame, changing the type of loan, or any combination of these. It is commonly used for secured debts or loans in the form of mortgages. A mortgage loan modification is considered the most common type because of the large sums of money at stake. A loan modification process can be understood with the help of a reliable Gulfport bankruptcy attorney.
A borrower who faces financial hardship may choose to request a loan modification agreement as a long-term debt solution. This is a better option compared to the forbearance agreement since it only provides short-term debt relief for the temporary financial dilemma of the borrower.
If you decide to request a mortgage loan modification, you need to submit a detailed application declaring your personal information, bank account details, credit card debts, business loan, car payment, monthly expenses (utility bills and medical bills), assets, liabilities, home mortgage details, bankruptcy information, and an in-depth explanation of your financial problems. A competent Gulfport bankruptcy lawyer can assist you in such filing.
Each program has its respective requirements and qualifications. These are generally based on the total amount of money borrowed by the debtor and the asset used as collateral for the loan. If the mortgage loan modification application is approved, you will be given an offer with new loan medication terms.
Some borrowers may be eligible for government-sponsored loan modification assistance. It includes the Flex Modification program by a government-sponsored mortgage company called Fannie Mae. Furthermore, mortgages that have been insured by the Federal Housing Authority (FHA) may qualify for the loan modification through the FHA-HAMP program of the agency. Military veterans are eligible for the mortgage delinquency counseling offered by the Department of Veterans Affairs in the United States.
Everyone wants to be debt-free. No one wants to be in trouble for not being able to settle loan monthly payments, credit card bills, car loans, mortgage payments, and other types of loans. Getting out of debt is usually time-consuming and stressful. You need to choose the best debt settlement strategy that will allow you to pay off your total debt. If you believe that you are not capable of paying your loan under its original terms, do not hesitate to contact us at Rollins Law Firm. Our experienced Gulfport bankruptcy lawyers will help you file a loan modification, negotiate the terms, settle with low-interest rates, avoid penalties, devise a debt management plan, provide debt advice, repay any outstanding debt, and get back on track in achieving a debt-free life.