A loan mod is the process of working with your lender to modify your loan.  When you do a loan modification you are simply restructuring the current terms of your loan. You are not creating a new loan but can cut the rate and years of your loan down.  There are different types of loan modifications. The most common mods are traditional modifications and HAMP modifications.

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In a traditional modification you are still modifying your current loan’s term. You can bring your loan current and add back due payments to the back of the loan, however your interest rate and monthly payments will not always go down. Traditional modifications are done mainly to help you avoid foreclosure and catch you back up on your loan payments.

A HAMP modification is a government sponsored program introduced back in 2009 to help struggling homeowners hurting from the economic crisis. These modifications can reduce your interest rate as low as 2%, bring your loan current, and reduce the term of your loan. These modifications are only offered to struggling borrowers and are more difficult to qualify for.

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A loan modifications main purpose is to make your home affordable, with an affordable monthly payment. Allowing you to continue making payments and stay in the home. However this can be a very lengthy and frustrating process and when not presented correctly to your servicer can lead to a quick disqualification by your lender or investor of your loan. It is often said completing a loan mod with your lender is  as difficult as representing yourself in court, and it’s very wise to seek help from a specialized third party to assist you in working with your lender as your lender is not always thinking of the best outcome for you, But be careful for unlawful companies who charge for these servicers up front.

What is a Loan Mod? by