Should You Stop Making Your Mortgage Payment To Get A Loan Modification?

Up until a few months ago, lenders were not modifying loans for home owners

that were on time with there payments. So if you have been considering to miss

a few mortgage payments to encourage your lender to modify your loan, you may

want to re-consider.

Normally lenders would only grant loan modifications to home owners that were

three or more months behind and the reason for this is because these

delinquencies proved that the home owners were in need of a loan modification.

But lenders now understand the importance of keeping a performing loan

performing or keeping a home owner making timely payments by means of a

loan modification, instead of making the home owner become delinquent, is not a

good idea for home owner or lender.

If you check your lenders websites you will now see that majority of them now

imply that being late on your mortgage payment is no longer a requirement to get

a loan modification approved. I want to encourage all home owners that they

should not wait until they have missed a payment, but if they foresee a problem

to contact their lender immediately to possibly avoid a delinquency.

The new Obama Plan or Making Home Affordable Plan is now dictating the

direction that many lenders are tailoring their policies in reference to loan

modifications. This new government loan modification program were designed

for home owners that are currently on time, as well as home owners that have

missed a few payments. Its also states on the main Making Home Affordable

Plan website that “"responsible borrowers who are struggling to remain current

on their mortgage payments are eligible if they are at risk of imminent default."

Now what does “risk of imminent default mean? This means that a home owner

that has a mortgage where the rate has recently adjusted and the payments are

no longer affordable or a significantly loss of income or any other type of

hardship, would make the home owner qualify under the new Obama Plan.

Now one important reason not to be delinquent with your mortgage payment, is

that is will disqualify you from getting a refinance under the Making Home

Affordable Plan, refinancing under this plan could help home owners refinance at

current market values so they are no longer upside down with their current

mortgage and get a more stable fix rate loan.

Another important reason not to miss payments is that your credit will be

tarnished for years to come. Some home owners may believe that missing a few

payments at the expense of their credit score, is not such a bad thing if they can

get a lower mortgage payment. Here are some of the consequences that most

home owners don’t take into consideration, they don’t realize how difficult

refinancing will be because of the late payments, getting approved for an auto

loan or getting new credit card accounts. Not to mention, having a low credit

score will cause utility companies to require a deposit, your interest rate on your

credit cards can go up and also you car insurance or home owners insurance

can increase because of a lower credit score.

Home owners need to also take into consideration that if they miss a mortgage

payment, that they still owe that payment, which because it’s late, it will now

include late fees and penalties and other junk fees that your lender can tack on

depending on the seriousness of the delinquency.