Is a Loan Modification the Best Plan for You?

In many markets around the country, homeowners are seriously upside down on their house. Homeowners bought at the peak of the real estate boom and when the bottom fell out, so did the value of their homes.

There are some options available to you if you do owe more on your home than what you can sell it for. One idea is to try for a loan modification. A loan modification is where the bank refigures the loan on your house, giving you some relief on how upside you are on your mortgage.

A loan modification will only be a good idea if you have the proper financials to support your ability to pay for your home. If you are experiencing financial duress, even with a loan modification, it's probably not a good idea. In that case, you should consider a short sale.

Most people who are in foreclosure and do a loan remodication, usually go back in foreclosure within six months. Make sure, if you are planning to apply for a loan mod, you can definitely afford to stay in your house; otherwise, you'll wind back up in foreclosure.