loan modification

When envisioning your financial strategy of dreams, nobody writes “loan modification” at the top of the wish list. For me, a loan modification was definitely Plan B. But upon writing a hardship letter, you will soon realize a loan modification can make the best of a bad situation. And lenders offer loan modification programs because it is easier to work with you than to go after you; a bank’s alternatives include foreclosures, wage garnishment, accepting a loss or receiving little to nothing if you file for bankruptcy. None of these options are attractive to you or the bank. Your credit will suffer, and the bank absorbs costs. Loan modifications can be less expensive and more profitable for lenders (though not in every case). To get a loan modification you generally have to ask. Banks can change the terms of your loan (longer terms, lower interest etc.) to make monthly payments more affordable. The changes can be permanent or temporary, and with lower monthly payments, you could end up paying more in interest over the years. You’ll have to ask your bank what criteria it uses. A loan modification kept me afloat, and avoiding default was de finitely worth the effort. However, make sure you know what a loan modification will cost you and determine if it's your best option -- not just a way to free up cash each month.