Mortgage modification – How it can help you manage the loan payments
September 27, 2012
When you face financial problems and you do not understand how to manage your mortgage payments, then you may choose to opt for mortgage modification. With the help of loan modification, you can ask your lender to alter the terms and conditions of your mortgage loan so that you find it affordable to make the mortgage payments and, at the same time, avoid facing foreclosure. In order to do so, your mortgage lender may reduce the interest rate, loan balance or any other part of the loan.
Essential documents required for mortgage modification
To avail the benefits of mortgage loan modification, you need to provide the essential documents.
a) Proof of your present income you earn.
b) Proof of your capacity to pay off the modified loan payments.
c) A letter that would state your present condition clearly.
d) Present an appropriate monthly budget.
3 Tips to follow while negotiating for mortgage loan modification
Here are discussed the 3 tips that you should follow when you negotiate for mortgage loan modification with your lender.
1. Try to make your own calculations – You need to be sure about your present financial condition before you may decide to talk with your lender. You should keep a track of your monthly income and the amount that you’ll have to spend on your bills. Try to cut down any unnecessary expenses that you make and save as much as possible. You may use your saved amount to pay off the mortgage loan.
2. Speak up with your mortgage lender – It is very important that you speak up with your mortgage lender and explain him in details about the financial difficulties that you’re facing. Once he understands your problems, he may agree to modify your home loan and offer you better terms and conditions.
3. Request your lender to postpone the payments – You may be expecting that your financial condition will improve soon. In such a situation, you may request your lender to postpone the mortgage payments for the time-being. Thus, once you get back on the right financial track, you may start paying off your mortgage loan.
2 Advantages of mortgage loan modification
Read on to know the 2 advantages of mortgage modification.
1. Repayment term period gets extended – This is one of the main advantages of mortgage loan modification. The repayment term period in case of a mortgage modification is extended thus allowing the borrowers to make the mortgage payments according to their convenience.
2. Interest rate is reduced – The lenders may agree to reduce the interest rate on your mortgage payments if they find that your financial condition is not strong to repay the loan. The lenders reduce the interest rate with the hope that they will be able to get at least some money that they had given you in case you cannot afford to pay off the entire mortgage loan with high interest rate.
By knowing the right tactics, you will be able to convince your lender for mortgage loan modification and manage your finances in a much better way.