Click on the photo to calculate loan values and payments on a 'modified loan' or fixed rate loan.
Many consumers are under the false impression that they can get completely out of the bad loan they are in. Recent laws only allow for modification of the loan's interest or terms only. Principal reduction is available only under limited circumstances.
In many instances, if you should not have been given the loan in the first place because of insufficient income or inadequate documentation, the federal programs will not necessarily help you. You may wish to consider bankruptcy or other methods to remedy your personal situation.
For example, if you cannot already afford the payments you are making on an "interest only" or "teaser rate loan," it is not likely that you would even qualify for a traditional 30-year loan at a fixed rate on the principal amount you borrowed. Moreover, if you are 'upside down,' but are not willing to ride the bad economic times out, there may be little or no purpose in reworking a loan you cannot pay over the long term. Please think carefully and do not be fooled by the scammers who tell you that you can simply get a loan modification and all will be well.
