How does mortgage loan modification help borrowers?
Are you facing problems in repaying your current mortgage? You can go for mortgage loan modification that helps you to stay current on your home loan. It can be defined as a restructured payment agreement in between a lender and a borrower with modified terms and interest rates. Often termed as loan modification, it is a better alternative to foreclosure or bankruptcy.
How to qualify loan modification?
You need to satisfy certain factors in order to qualify for a mortgage loan. Your lender will evaluate the following qualifying factors before approving your loan modification request.
• You have missed 3 consecutive monthly mortgage payments.
• The mortgaged property is your primary residence.
• You are going through a financial hardship; such as, sudden medical expenses, job loss, etc.
• You’re willing to have an alternative payment option.
• You have not filed bankruptcy to clear your debts.
Along with this, the lenders also evaluate the borrower’s financial status and the equity in the property.
Types of modification agreements
On the basis of your financial condition, your lender may provide you with one of the following 2 types of mortgage loan modification agreements.
1. A forbearance agreement for about 2-3 months in order to assess whether or not you are able to pay your monthly installments on time. Lenders usually approve mortgage modification if the borrowers are able to make the monthly payments as per agreement.
2. A restructured home loan at reduced interest rate and an extended loan term.
Benefits of mortgage loan modification
Go through the following lines to know how mortgage loan modification can benefit you.
1. The interest rates on your mortgage will get reduced, which will lower your monthly home loan payments.
2. You’ll be able to get current on your mortgage.
3. You can extend the term of your mortgage loan.
4. Your current mortgage loan may also include your past due payments.
How to get loan modification approval?
You need to follow 5 steps in order to convince your lender to approve your mortgage modification request.
1. Clearly describe your financial hardship; you can also provide a hardship letter.
2. Express your desire to repay the loan amount.
3. Describe your recent employment status; explain how it’ll help you to make monthly payments on revised terms.
4. Explain how your lender will be benefited if you’re able to repay your loan.
5. Show your monthly budget and explain how you’re planning to cut down your expenses in order to repay your mortgage.
If you wish, you can contact an attorney or a loss mitigation specialist, who can negotiate with your lender on your behalf and help you to get the mortgage loan modification approval.
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