Are you behind in your mortgage payments and currently struggling to pay your lender? If your answer is “YES,” then modifying your mortgage is probably the right option for you. If you are delinquent on your loan, your credit will not permit refinancing of the mortgage balance. An outright sale of your home may not be feasible because you have nowhere else to live. A loan modification program could allow you to extend the term of your existing loan, reduce the interest rate, reduce the principal, and reduce the amount of your monthly mortgage payment, all while remaining in your home.

What causes a Borrower to become delinquent?

A borrower can become delinquent in their mortgage loan payments due to many reasons that result in financial hardship. Examples of such difficulties could be, but not limited to, losing a job or having to take a decrease in income, an extended illness incurring significant medical expenses, the death of the household primary income earner, a divorce or marriage separation, or some other circumstance.

Delinquency is not always the biggest factor in  consideration for a loan modification. 

Many believe that the biggest requirement to apply for loan modifications is to be delinquent on your loan for a minimum of 60 days, which is not always the situation. Contrary to popular belief, the borrower does not need to be behind on payments for the lender to consider modifying the loan. The most significant factor in a loan modification consideration is if the borrower is facing financial hardship and those hardships keep you from being able to make the payments on your mortgage. Most lenders are willing to work with a borrower rather than start the foreclosure process because the foreclosure process is not in the banks best interest.

Loan Modification strategies

There are many strategies that lenders utilize in a loan modification program to provide temporary relief and distress for the borrower. Some lenders may offer just one method, while others may offer a combination of strategies for a wider variety of different approaches or options. The best way to approach a loan modification with your lender is to be equipped with the information and understanding of what types of options are possible.

  • Reduction of The Principal Amount: This option allows a reduction in your loan by eliminating a portion from your original debt. The borrower benefits by having the loan value trimmed down, which offers a new mortgage payment amount that is more manageable for you to make.
  • Lower Interest Rate: This option involves lowering the interest rate on the existing loan amount as specified by the lender. While this option can be a permanent one, most times, it is temporary to assist in financial hardship. When the interest rate is lowered for a specific amount of time, it is best to be prepared by having a plan for when the interest rate increases back to the previous rate to avoid financial hardship again.
  • Interest Rate Conversion: When the interest rate on a mortgage loan is a variable rate, the amount of your monthly mortgage payment can increase suddenly make it harder to make the payment month to month. A loan modification to convert the interest rate from a variable-rate to a fixed rate can provide a stable interest rate, which allows for a more predictable monthly mortgage payment that may be easier to make.
  • Extended Loan Period: This option involves modifying the loan term. The lender can extend the term of the loan, which then recalculates lower mortgage payments for each month of the loan.

Debt Rescue Law is a trusted partner for many borrowers and can provide more information about the loan modification program. Give us a call at (833) 707-1234 today for a FREE consultation to get your loan modified and keep your home!

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