AlfonsoGomezBroker.com - I have always believed that loan modifications are very risky. They're risky both monetarily and emotionally. Homeowners, or any person in distress for that matter, are extremely vulnerable and are not typically thinking straight.
The numbers... if the home is underwater, the balance owed is higher than the value of the home, the logical thing to do is to let the home go. The numbers don't add up because why would anyone pay more for something that's not worth it? The smart and logical thing to do is, let it go, rent for three or four years and buy again then. After that time (3 to 4 years) you'll buy a home with a 30 year loan, compared to a 40 year loan in most loan modifications, and owe A LOT less for maybe a bigger and better home.
Emotional attachment and pride of ownership... most homeowners refuse to see the numbers because of their emotions. Emotions and pride (of ownership) will typically overcome any rational thoughts hence homeowners will reach out to lenders for a loan modification.
Loan modification are only a smart idea if you have a long term plan (15 to 30 years). Most loan modifications are 40 year terms. Right or wrong loan modifications are available for most homeowners behind on their mortgage payment, and something even if you're not behind.
My opinion is that you balance the numbers with the emotions for the best decision for you and your family's long term goal. Try not to let your emotions and pride completed overtake the numbers and then you'll see what makes the most sense, let it go...
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