Will a Mortgage Modification Affect my Credit Score?

People who are planning to get the mortgage modification will be thinking about the effect of a modification on the credit score.This is because the credit report is going to play the most important role when you are going to get loans in future.So here is the answer to your question.
The loan modification:

One of the major techniques that has been used by the home owners to stop foreclosures is the loan modification. But people are also opting for other solutions like the mortgage refinance and the forbearance. The borrowers who do not want to wait too long to get the solution will be opting for the forbearance. This is because the lender would be ready to give it quickly than the modification.

Will it affect my credit score?

If you wonder whether a loan modification would reduce the credit score,the answer is dependent on your financial condition. It depends whether you were opting for the solution after missing payments or not. The credit score will definitely go down if there are late or missed payments.This is the answer to the question.

Reducing the principal:

Loan modification would either result in a reduced interest rate or a reduced principal. But if you get a reduction in the principal,it would be reported as "paid for less than owed" in the credit report. One more thing you need to remember is that you need to ask the lender to report the mortgage as "current" to the credit reporting agencies.

For more details,you can have a look at the effects of loan modification on credit score and Bank of America Loan Modification for more details.

By mccullum rice
Published: 7/18/2009
 
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