Why would a modification to our home raise the payment from $1460 to $1700?

UPDATED: Sep 13, 2010

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Why would a modification to our home raise the payment from $1460 to $1700?

We have been working with a bank for almost 2 years now and this was their final answer –  $1700 a month. I thought that the purpose of modification was to help lower monthly payments so the payments are more affordable so the house doesn’t go into foreclosure. I can’t help but think we are being taken advantage of. We have a 15 year history of no late payments until we missed our first payment 2 years ago.

Asked on September 13, 2010 under Real Estate Law, Idaho


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

It depends on what your loan was originally and how it was structured. For example, if it was an ARM or an interest-only loan and you cannot get that anymore (pretty much no one can), then a more traditional loan could have a better interest rate and help you pay down the principal faster, but still have a higher monthly payment.

Also, there may be some costs--origin fees; title insurance; an appraisal; etc.--which are being folded into your loan costs.

Make them explain how they come to the number they do. That doesn't mean it will be an answer you like, but you should never even consider a loan unless you understand how you're being charged.

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