Foreclosure prevention

Loan Modification

A borrower takes a loan from the lender based on certain terms and conditions of repayment. These are derived after carefully doing a check of the principal amount, which is being lent as well as a thorough check on the borrower's ability to repay the loan. There are a few factors which are considered while making the loan agreement such as the risk involved, third party guarantee, collateral property, guarantee, etc. Also, in some cases a moratorium period or the payment holiday as it is referred to be given, which is most common in education loan.




Now it might happen that due to some unforeseen circumstances there is change in the ability of the borrower to repay the loan. For instance he lost his job or his predicted income flow has gone down which would seriously hamper his chances of repaying the loan. In such situation there is something called as loan modification wherein the borrower can bring in certain changes in the loan agreement and can alter his repayment schedule to suit his requirements? For instance; one of the changes that can be done would be to reduce the EMI (Equated Monthly Installments) so that borrower's reduced income is budgeted for, although this would mean increasing the repayment period. Another way to bring down the EMI would be to reduce the rate of interest. These loan modifications are done strictly on a case to case basis as the lender would need to ensure that the borrower's repayment abilities have been checked and that a loan modification is a must if the borrower is to make any payment.




Many a time the lender agrees to such loan modification as he is aware that if this is not done it might lead to a case of loan default as the borrower is clearly not in a position to repay the loan, such facilities in financial instruments has helped to bring down the occurrence of bad debts to a considerable extent. Finally REST Report website is a best support center all about Foreclosure prevention and Loan Modification

Understanding Reverse Mortgage

Reverse Mortgage

A person’s perennial quest for food, clothing and shelter is quite an interesting journey and has evolved over the years mainly fuelled by the insatiable human desire. Well one can always argue that to survive food, clothing and shelter is enough and to achieve these three things in life is no big deal, but then the human mind tells us to yearn for that dream house, for that scenic setting and have good food and then the mind immediately is in the process of conjuring delightful images of the vision.

Well, the world of finance is a continuously evolving world where new and new financial instruments are being invented to help us chase our dreams, one of those vehicles is reverse mortgage, In this the obligation to pay off the loan starts after the death of the house owner/or home is sold/the owner leaves permanently who took the initial loan to build/purchase the property. In a traditional mortgage where the house owner makes a monthly amortized payment to the lender and after each payment the borrower’s equity or stake in the property increases and upon paying the loan completely the borrower gets the ownership documents where as in reverse mortgage the homeowner makes no payment and all interest is added to lien on the property, it provides income that people can tap into for their retirement as it is made available only to senior citizens aged 62 or more and is generally used to release the home equity.

The advantage of this concept is that here the borrower’s credit history is not relevant and thus is often unchecked because the borrower need not make the payment as the home serves as the collateral security, it must be sold in order to repay the mortgage when the borrower dies (in some cases the heirs have the option of repaying the loan and without selling the property)

The drawbacks obviously are that these types of mortgages have large origination costs as compared to traditional mortgages. These costs become part of the initial loan balance and accrue interest. Senior citizen borrowers with good credit should carefully analyze the options of a more traditional mortgage, such as a home equity loan, against a reverse mortgage. Also reverse mortgage is criticised on being too complex and user unfriendly as a senior citizen entering a reverse mortgage contract has to understand a lot of complex terminology and often ends up confusing the fine prints in the terms and conditions.

To know more proceess on Mortgage modification visit REST Report website. The website is also helpful for Making home affordable.