Within the past 10 days interest rates have moved up tremendously. Although in they are still at historically incredible levels, the recent movement is a little alarming. If you are planning on contacting your bank and doing a loan modification on your own, don’t wait any longer. When rates are low banks it is easier for the bank to say yes to your modification.
For example, if you currently have a rate of 6.5% and current market rates are 4.5%, the bank could just bring your rate down to the market level and everybody wins. On the other hand, if market rates are 7%, your bank might not be so quick to take your already below market rate, and make it even lower.
When a bank evaluates a customer for a possible loan modification, they want to make sure that it makes sense to both the borrower and themselves. As rates increase there will eventually be a point of diminishing marginal returns in which it will not make sense for the bank to approve your modification.
Although we are still a long way from rates at 6.5 or even 7%, the recent move in the past 10 days indicates that we may have hit a bottom (and bounced pretty hard off of it too). The markets have seen a full percentage increase in rates in only the last 10 days. In my 21 year career in the mortgage finance industry, I have never seen a movement so fast in such a short period of time. If you are going to do anything, now is the time to act.
It does not cost anything to do a loan modification yourself. Your only risk it time, and if you are successful, the benefits can be incredible. Many would have you believe that the process is complication and should be done by a professional only. This is not true, in fact many lenders are encouraging their clients to call and discuss the options available.
I would make one very important suggestion before contacting your bank. It is important that you have a basic understanding of the process and the qualifications that are necessary in order to be approved for a modification. Learning the process will allow you to present yourself in the best possible way so that your application is approved. The stronger you present your case, the happier you will be with the offer that the bank will make to you. Remember, you only have one chance to make a powerful impression on them.