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Principal Reduction

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What is a Principal Reduction?


In the world of home loan modifications, there are many avenues to travel down that will end up with you getting a lower monthly mortgage payment.  Your California loan modification attorney can get your interest rate adjusted, the length of your loan adjusted or some other option.  One of the least understood loan modification options is the principal reduction.

Principal reductions are difficult to accomplish, and lenders are rarely interested in doing a principal reduction, or even willing to admit that it is an option.  However, a qualified home loan modification company will have the kind of knowledge, experience and know-how to achieve this incredibly important goal.  Principal reduction is a process whereby your home loan modification company negotiates down the principal of the loan, which will lower your monthly payments.  Lenders do not want to give up profits, and so this option is often the last discussed.  It is also difficult for most loan modification companies to achieve because it takes a particular skill in negotiating and a tenacious attitude. 

Many people would love to see their principal balance go down 10, 15 or even 20%.  This would not only save money in the short term (monthly payments) but in the long term as well.  What most people are realizing is that they want to stay in their homes over the long term, and they are looking for solutions that will allow for that.  Principal reductions are a possibility, but only for a highly qualified loan modification company that has a very good loan modification attorney.

Principal reductions are very scarce, even in California where loan modifications are helping numerous people.  In fact, in a New York Times article on July 13-2008, only 356 of 21,359 loan modifications that were done in California involved a balance reduction.  That is obviously a very low percentage, but it’s not at all impossible.  Since it takes a little extra effort, most home loan modification companies will pretend as if it’s not an option, or that it is a pipe dream.  Truth-be-told, with the right key any door can be unlocked, even those guarding a principal reduction.  Odds are the 356 principal reductions were done by a handful of California home loan modification attorneys who know what they’re doing and who possess distinct skills for negotiations.  This is a shortcoming most loan modification companies have, that they don’t want to put the kind of energy it will take to get the best results for their clients.

One individual who got a principal reduction bought his home for $500,000 but had the principal reduced to $380,000!  That’s 24% principal reduction!  His house had been devalued by quite a bit, losing over $200,000 in value in his home in a very short time.  The principal reduction he got was better than the lower interest rate and the other options he had available.  With the right loan modification attorney, a principal reduction is highly possible.

Visit us at http://www.loanmodificationhelpcenter.org/ or call 800-359-6941.

Legal Disclaimer

The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter.   Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.

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We can help you stop foreclosure with a loan modification in the following states:

If you need help understanding your option of taking advantage of the home loan modification process, the help is available to you everywhere. The process is quite tricky and it is highly recommended that you do indeed seek legal advice before signing on the dotted line, in order receive the most efficient and cost-effective modification to your mortgage payment.

Where do I get Advice
There is advice all over the web on how to receive a loan modification; some of this advice is quite helpful, while some is quite dreadful. There is also the opportunity to hire a professional service that will help you go through the paperwork and work with the lender to help you get all the benefits that you deserve, due to a hardship. Loan modification is a process that must be understood completely and thoroughly. This article can actually offer you an insight on the process of loan modification and tips that will better help you as a homeowner save your home from the risk of a foreclosure.

Loan Modification Advice
First and foremost, it is important to determine if you are eligible for a loan modification. This requires writing a letter of hardship explaining to the lender what exactly the reason is for your late payments and the fact that you are unable to pay your mortgage. Doing a loan modification on your own requires more than just advice. Becoming educated about the process is more important. This is perhaps a good reason to hire a professional loan modification company to take part in the process. They will handle everything for you, while educating you in the progression. There is a fee charged for hiring these companies, but in turn your mortgage payment can be lowered quite a bit and professionals can even find things in your original loan papers that may prove that the lender may have broken the law during your original mortgage signing.

If you do choose to take the big leap of the loan modification process on your own, you must first contact the lender and they will lead you to the correct department, normally the loss mitigation department. You may not want to directly say that you are in the process foreclosure. We do not want the lender to think your situation is not worth their time before hearing you out. Always document anything relating to the loan modification process, every phone call and any other information you may receive during the process must be documented. Always discuss every option available with your lender, so that you may come up with the best alternative for you. It is true you will save money going directly through your lender and let’s face it, you are struggling already trying to make your payments, but professional assistance can help immensely.

No matter what direction you decide to take, loan modification will be what determines the amount of time you have in your home. If you are eligible you should act as soon as possible.

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