Opt for VA loan modification to save your home from foreclosure

If you are having difficulty in making payments towards your VA loan and thinking of opting for foreclosure, you can take advantage of VA loan modification program. If you are hearing this phrase for the first time and thinking to yourself, “What is loan modification?”, then you should have some basic concept of the modification program.

What is a VA loan?

A VA loan is offered to those personnel who are in military service for at least 181 days or 3 months during war time and have been discharged from the service with “honor” status. People who have spent at least 6 years in the National Guard or Reserves or spouses of those military personnel, who have been killed during service can also take advantage of this loan. These loans are insured by the federal government and offered at lower interest rate and no down payment option. It provides you with 100% financing.

The underwriting requirements and standards for VA loans are also less stringent. Another significance of this loan is, though you are not making any down payment, still, you do not have to buy private mortgage insurance.

What is VA loan modification?

To understand “What is loan modification?”, you need to have a clear idea on the loan modification program. It is a process where you can modify the terms and conditions of your existing mortgage as per your affordability.

You can do loan modification by the following ways:

• You can reduce the interest rate
• You can reduce the principal
• You can change the adjustable rate mortgage to a fixed rate one
• You can reduce or waive off penalties for late payments
• You can extend the loan term
• You can cap the monthly payment to a percentage of your income

As a result of loan modification, you will have lower monthly payments, which can give you a financial relief. However, you need to meet some requirements to be eligible for a VA loan modification program.

What are the requirements for a modification program?

To be eligible for a VA loan modification program, you need to meet the following standards:

• You have already missed several monthly payments and have become a defaulter.

• You have not modified the loan more than once within a 3-year period and not more than 3 times within the loan term.

• The reason for your financial distress has been resolved and will not reoccur in the future.

• You have made at least 12 monthly payments from the closing date of your original loan.

After you have got satisfactory answer to your question, “What is loan modification?”, you can find a loan modification company via internet. You should make sure that the company you choose is an authentic one, so that you can get better loan terms and conditions and save your home from foreclosure.