Sub Prime Loan Modifications Are Not Necessarily The Best

There is another option for homeowners who do not have good enough credit to qualify for a standard loan modification; it is a sub prime loan modification. This option is available if you have really bad credit. Do not just automatically think it is the right option for you unless you do not get approved for a standard modified loan agreement.

The difference between a sub prime loan modification agreement and a standard modified loan agreement is the interest rate, the sub prime is higher, but both agreements have the five year duration. Either agreement will help homeowners who need help being able to afford their monthly mortgage payments along with their other bills. There are some homeowners who have not choice but to go with a sub prime loan modification. Many homeowners need to turn to the lenders or others who approve the guidelines for the modified loan.

The sub prime loan modification is more hurtful than helpful for homeowners than the standard. The reason being is the higher interest rate. The lower payments are only helpful for a short time as they are paying the interest for the duration of the loan and you add that to the loan and the entire cost is much higher.

As a homeowner, it is up to you to be informed of what the guidelines are for your state and lender. You should try and reach an agreement with your original lender first, even considering hiring a modification attorney. The help of an attorney can increase the chances of being approved, you may not be charged for the initial consultation. Whether you try by yourself or with the help of an attorney, it is wise to see if you can get a standard loan modification agreement before settling for a sub prime one.

If approached by a sub prime lender, don't just accept it. Make sure it is legitimate along with whether it is worth it or not. Sub prime agreements are not necessarily looking out for the homeowners, but looking for the lenders. It is important to look into all of your options before settling for a sub prime loan modification agreement.