Loan Modification Help Center – What is a Principal Reduction?

In the world of home loan modifications, there are many avenues to travel down that will end up with you getting a lower monthly mortgage payment.  Your California loan modification attorney can get your interest rate adjusted, the length of your loan adjusted or some other option.  One of the least understood loan modification options is the principal reduction.

Principal reductions are difficult to accomplish, and lenders are rarely interested in doing a principal reduction, or even willing to admit that it is an option.  However, a qualified home loan modification company will have the kind of knowledge, experience and know-how to achieve this incredibly important goal.  Principal reduction is a process whereby your home loan modification company negotiates down the principal of the loan, which will lower your monthly payments.  Lenders do not want to give up profits, and so this option is often the last discussed.  It is also difficult for most loan modification companies to achieve because it takes a particular skill in negotiating and a tenacious attitude.  

Many people would love to see their principal balance go down 10, 15 or even 20%.  This would not only save money in the short term (monthly payments) but in the long term as well.  What most people are realizing is that they want to stay in their homes over the long term, and they are looking for solutions that will allow for that.  Principal reductions are a possibility, but only for a highly qualified loan modification company that has a very good loan modification attorney.

Principal reductions are very scarce, even in California where loan modifications are helping numerous people.  In fact, in a New York Times article on July 13-2008, only 356 of 21,359 loan modifications that were done in California involved a balance reduction.  That is obviously a very low percentage, but it’s not at all impossible.  Since it takes a little extra effort, most home loan modification companies will pretend as if it’s not an option, or that it is a pipe dream.  Truth-be-told, with the right key any door can be unlocked, even those guarding a principal reduction.  Odds are the 356 principal reductions were done by a handful of California home loan modification attorneys who know what they’re doing and who possess distinct skills for negotiations.  This is a shortcoming most loan modification companies have, that they don’t want to put the kind of energy it will take to get the best results for their clients.

One individual who got a principal reduction bought his home for $500,000 but had the principal reduced to $380,000!  That’s 24% principal reduction!  His house had been devalued by quite a bit, losing over $200,000 in value in his home in a very short time.  The principal reduction he got was better than the lower interest rate and the other options he had available.  With the right loan modification attorney, a principal reduction is highly possible.

Visit us at http://www.loanmodificationhelpcenter.org/ or call 800-359-6941.

Legal Disclaimer

The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter.   Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.