A mortgage loan modification can help you stop foreclosure and stay home. But if you're like most owners, you're probably wondering how it will affect your credit, and if in a good or bad. Unfortunately there is no single answer, it depends how far behind you and the type of mortgage loan modification will be granted.
Technically, since it is not borrowing the money, a loan modification for housing will not affect your credit score. If you are paying less interest, has a lower burden of debt. And because most lenders prefer a reduction in interest rate, there is a good possibility that a major loan modification is improve your credit score.
The consequences are even better if your lender forgives part of the principal, though this is less common. If you amortize $ 50,000 of your loan amount will be displayed in your report as a smaller loan, which can increase your credit score.
The lender factor
Unfortunately, not always the case. It also depends on how your lender reports the modification of mortgage loans led to the credit bureaus. Many consider that paid less than the original amount owed, which will be deducted from your account. If you are already being implemented, the impact on your credit can be substantial. Of course, facing a short sale or an execution mortgage, a mortgage loan modification is still the best way to keep your credit situation.
One of the first problems with the loan modification is that the amount forgiven is generally passive. That means that if your debt is reduced by $ 50,000, the IRS considers as income and imposes the corresponding taxes. This can take homeowners off guard during tax season, since many do not know the implications Prosecutors at the time of modification.
To avoid such incidents, the IRS announced in 2007 that the loan modification would not be classified as "prohibited transactions." This applies to all loans from January 2004 to July 2007, the peak of the sub-prime boom, and January due to adjust 2009 to July 2012. If the mortgage falls within these categories, you will not have to file a Form 1099 declaring the change as a liability.
A modification loan is like going to court: you can save money and get a lawyer, or can invest in professional representation and obtain the best mortgage assistance. Your loss mitigation will not happen overnight, but if a loan modification capable lawyer, you can be sure you're in good hands.
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Loan modification Department helps you legally change the terms of your mortgage so that you can pay it off better But you can’t expect lenders to make it easy. In fact, many homeowners fail to reach a reasonable settlement with their lenders, and even those who do have to settle for less-than-satisfactory setups.That’s where your loan modification attorney comes in.