The scammers are very deceptive often presenting themselves as representatives of the Obama Administration. They send official looking documents which lead you to believe that they are legitimate, but they are not.

If a loan modification company asks for big up front fees or any fees up front for that matter, run don’t walk away.

You can read more about these scammers here.

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If you need to apply for a loan or a mortage or want to refinance your home, you may need to improve your credit score.

There are several things you can do in order to quickly improve your credit score.

The first thing you need to do is get a copy of your credit report and check all the information on it. You can get your credit report for free HERE. Go over all the information listed on the report and make sure that there are no mistakes.

If you apply for credit a lot and many companies are pulling your credit in a short period of time it could have a negative effect on your credit score. Changes in the law though have made “consumer-originating” credit report requests not count so much. Meaning if you pull your own credit it shouldn’t have a negative effect. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what’s on them, and smart consumers shop around for the best mortgage and car loans.

The two major factors on your credit score are your payment history and how much of your available balance you owe. If you are over 60% of your allowed balance on credit cards and such, this is bad for your credit score. Bankruptcies and foreclosures can stay on your credit report for as many as 10 years and thoses are murder on your credit score. Late payments are bad too. Make sure to pay bills on time, even if it’s only the monthly payment.

So if you are maxed out on a lot of cards, you may be better off getting more cards and spreading the balance over them. The theory is that you are not using a great deal of available credit. Your score may temporarily drop when you apply for the cards, but it could raise the score shortly there after.

If there are any mistakes on your report and you want to improve your credit score, be sure to write letters to the credit agencies telling them. By law, they have 30 days to investigate. If the tradeline is not correct, they must remove it.

But you must know what is on your credit report in order to do that. So be sure to get your credit report and study it before taking any further steps.

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For many Americans the answer to that questions is “I have no choice.” But for a lot of other people, the it is a lot harder to answer. You may just barely be able to pay your loan, but you are not able to sell your house because you have lost equity and can not sell it and the bank is unwilling to do a loan modification. You may find that your you owe so much more than your house will ever be worth again that you may as well walk away from your mortgage now.

Here Are Some Costs of Walking Away From Your Mortgage.

You may struggle internally with the thought of not living up to your obligations. For some people this is a serious issue that will haunt them for a long time. For others, not so much.

Your Credit Score Will Take A Serious Hit.

The damage done to your credit report by a foreclosure is bad. Your FICO Score can literally drop hundreds of points. The foreclosure will remain on your credit report for up to seven years or more, making it virtually impossible to get another home mortgage during that period..

Also, let us remember that now, not only do mortgage companies look at your credit report, but so does insurance companies and many potential employers as well. The stigma attached to a foreclosure is minimized a bit though because of what is going on in the economy . So possible employers may not take as hard a look at that as they once would have.

Added Tax Burden When You Foreclose.

Typically, under tax code you are responsible to pay income tax on any amount of money which has been forgiven by a lender, There is a new law however that minimizes such a burden for primary residences. You should definitely consult the advice of an accountant and an attorney regarding these issues.

Also in some states, banks may be able to come after you for the money you owe them. They do not usually do this, but it may become more commonplace as the financial crisis deepens.

So Where Do You Live After You Give Up Your Home?

Typically, unless you move in with friends or relatives, you will have to find a rental unit to live in. When you start looking for rents, you may find that in the end it is not really much cheaper than owning. As the demand for rental units climbs, so does the amount charged. You could find yourself struggling just as much to meet a rental payment as you would a mortgage payment.

So therefore, the answer is there is no easy answer. Walking away from your home may have benefits for you, but it also comes with a steep price.

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You may have no alternative but to seek foreclosure advice or a home loan modification. If that is the only way out of your crisis then you should not be afraid to pursue it.

There is no question that the mortgage industry has gone through some incredible changes over the last two years or so. Prior to these change, a very common loan was the “No Income Documentation” Loan. This loan was actually a very good alternative for self employed borrowers who do make a good income, but because the nature of their business, show little profit on their tax returns.

But with all the turmoil in the real estate market, “No income verification’ mortgages have all but vanished. If you can not prove enough income to justify the mortgage, you are out of luck. The problem with that is that it leaves many good and qualified borrowers out in the cold. The are unable to take advantage of the new lower interest rates or are unable to refinance their adjustable rate mortgages that are climbing higher and higher.

When this happens to you, a home loan modification may be your only alternative. But you should be careful about negotiating such a move on your own. Many lenders are slow to negotiate with private individuals and  in many cases refuse to modify the mortgages at all.

If at all possible, you should seek the advice of a company or attorney who is knowledgeable and effective in obtaining meaningful home loan modifications. These companies are easy to find. But you should choose among them carefully.

Always be sure to read the fine print. Always ask for referrals from recent clients. And always read all documentation before signing anything.

Once you go through the proper steps of choosing a good Home Loan modification company you will probably get better results than if you tried to accomplish this on your own.

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