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I am doing a loan modification. If the bank lowers my principal loan what will happen in the future if i want to sell my house?

I am doing a loan modification. If the bank lowers my principal loan what will happen in the future if i want to sell my house? by vivekmagento2014@... from Glendale, California. Sep 30th 2015 Reply


It fully depends if the lender is either Reducing the principal or simply deferring the principal balance. If they reduce it then when you sell in the future and you have equity, the equity is yours. If they defer it then you do end up paying it back when you sell the property in the future sale when you have equity. I hope that answers your question. Feel free to give me a call with any more questions at 619-632-2190. Thank you Steven Tavera

Sep 30th 2015
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Derick Condron (rightstartoregon)
#33 ranked lender in Oregon - 597 contributions

You will want to read everything very carefully to fully understand what they are doing. The details of what the principal reduction will mean to you in the future will be spelled out. If its reduction it should be there when you sell, if they defer them to a future date then it will be owed, there also may be prepayment penalty's in there as well.

Sep 30th 2015
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Joseph S. Restivo (josephsrestivo)
#1130 ranked lender in California - 6 contributions

Just sell it like normal.

Sep 30th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

Typically, the lender does not reduce the principal balance.. in fact, it's the last thing they do in a modification.. guidelines are very simple.. 31% of your income goes towards your housing payment.. if your payment is higher than that, then the first thing they do is recast your loan back out to 30 or even 40 years, if that doesn't get your payment low enough, then they lower the interest rate, then the next thing is they might take a portion of your balance, and move it to the back of the loan and not charge interest on it.. and the last thing is to do a principal reduction.. If they are in fact reducing your principal balance, then your modification agreement will outline if or how it is to be paid back.. There's probably a waiting period from 3 to 5 years, which means you can sell it, but you might have to pay back some or all of the monies they reduced. however, I've never seen anything past 5 years.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Sep 30th 2015
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Sep 30th 2015
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Jericho Cherry (Jerichocherry)
#58 ranked lender in Virginia - 1,107 contributions

Check with your lender to get a full understanding of your Modification.

Sep 30th 2015
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