Loan Modification questions

[Anonymous]

I lost my job due to COVID last year.  I was able to keep up with my mortgage with Wells Fargo (WF) during this time.  However, this year I asked to go into forbearance.  After three months, I told them I would start paying again - and they tacked the three months to the end of my loan.  My account manager at WF then asked if I wanted to apply for a loan modification.

I have just been approved for a loan modification (3.125% for 40 years).  Current loan at 3.625% for 15 years.

Is there anyone who would be able to let me know: what kind of impact a loan modification could have on your credit score? How long does it stay on my credit? I am not able to get a re-fi since I am now an independent contractor.  I have done the math, and with the loan modification - after the first 3 months of trial period, I can pay addl toward the principal, which I think I could end up paying off the loan modification in 15 years.  Does this affect me with future mortgage lenders if I decide to buy another home in 5 years?

Home is valued > than double the loan value, if that info is helpful.

Any insight would be greatly appreciated.  Thanks so much.

[VALoanMaster]

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@Anonymous wrote:

I lost my job due to COVID last year.  I was able to keep up with my mortgage with Wells Fargo (WF) during this time.  However, this year I asked to go into forbearance.  After three months, I told them I would start paying again - and they tacked the three months to the end of my loan.  My account manager at WF then asked if I wanted to apply for a loan modification.

I have just been approved for a loan modification (3.125% for 40 years).  Current loan at 3.625% for 15 years.

Is there anyone who would be able to let me know: what kind of impact a loan modification could have on your credit score? How long does it stay on my credit? I am not able to get a re-fi since I am now an independent contractor.  I have done the math, and with the loan modification - after the first 3 months of trial period, I can pay addl toward the principal, which I think I could end up paying off the loan modification in 15 years.  Does this affect me with future mortgage lenders if I decide to buy another home in 5 years?

Home is valued > than double the loan value, if that info is helpful.

Any insight would be greatly appreciated.  Thanks so much.

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No, a modification won't impact your ability to buy a home 5 years from now.

I'm not sure if the modification will impact your scores since lenders are not supposed to report negative remarks under COVID forbearance agreements.

[MauiMan85297]

Why would you do a loan modification to reduce your rate by just .500% and lenghthening your loan by more than double.  If your loan is conventional then you can't refinance unless you have 2 years under your belt for 1099 (some investors have overlays where they could take 1 year) unless your loan is a Gov't loan then you can do a streamline today as those loans don't income qualify you.  Your lender could be adding additional fees to your loan as well to modify.

Modification doesn't hurt credit but does show as a new Note and that could affect a score.