What is a re modification loan?

What is a re modification loan?

Loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three.

What happens when you modify a loan?

With a loan modification, the total principal of your existing loan amount won’t change. Rather, your lender may agree to a lower interest rate or to lengthen the payoff terms of your home loan.

What is an example of a loan modification?

A modification involves one or more of the following: Changing the mortgage loan type (e.g., changing an Adjustable Rate Mortgage to a Fixed-Rate Mortgage) Extending the term of the mortgage (e.g., from a 30-year term to a 40-year term) Reducing the interest rate.

Can you modify a loan more than once?

Yes, it is possible to get a second loan modification though statistically it’s obvious that you are less likely to get a second modification if you’ve had a first, and a third if you were lucky enough to get a second.

Can you refinance a modified loan?

Having modified a loan does not disqualify a borrower from being able to refinance. A modification changes the terms of an original contract, nothing more and nothing less. If a loan is modified, it is just like the terms under the modification had been in place since day one of the loan.

Are loan modifications good or bad?

One potential downside to a loan modification: It may be added to your credit report and could negatively impact your credit score. The resulting credit dip won’t be nearly as negative as a foreclosure but could affect your ability to qualify for other loans for a time.

How long can you refinance after a loan modification?

There is a 12-24 month waiting period before you can refinance under most post-loan modification options. To refinance a loan’s interest rate and repayment terms, the refinance lender requires you to have stable income and total monthly expenses within 40 percent of your gross monthly income.