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Will a Loan Mortgage Modification Help Lower My Payments?

loan mortgage modification

Will a Loan Mortgage Modification Help Lower My Payments?

Reassessing your loan mortgage is sometimes needed to make payments easier to manage. If you’re currently having financial struggles and looking for relief, you can consider a loan mortgage modification program. This will help you create a more affordable loan payment that is within your budget.

A mortgage loan modification allows you to make short-term or long-term changes including payment extensions or reduced interest rates. However, there’s no need to modify your mortgage loan entirely, especially if you only want to reduce your interest.

How to Manage Mortgage Modification

By making some adjustments, you can pay off your loan without affecting your credit. A mortgage modification is a change made to your loan’s original terms. One of the main reasons for a mortgage modification is financial problems and other related issues.

There are many ways to lower your payments, but the first thing you should consider is asking your lender to compute the new payment according to the amendments made in your loan agreement. The following are some good options if you want to modify your loan:

Reduce interest rate.

By lowering your interest rate, you are also lowering your monthly payment. This is the most common option for a loan mortgage modification to meet monthly dues. However, some interest reductions are only for a temporary period, so make sure you understood the terms before agreeing to a new payment rate.

Lower principal.

It’s possible to pay off less than the original amount you have borrowed if your lender deducts a small percentage from your loan. With the reduced balance, your new monthly payment is calculated in order to get lower principal. However, lenders don’t usually provide reduced principal, but they may modify some features to make it a win-win situation for the lender and their borrowers.

Term extension.

Long-term loans require more years before they are fully repaid. But the key advantage if you’re repaying a long-term loan mortgage is lower monthly payment. This is also known as re-amortization where you’ll be paying your interest in a longer repayment period.

Put over payments.

Depending on your loan agreement, you can ask your lender to skip some payments. This option is applicable if you have a delayed paycheck, or an unexpected medical bill. Postponing payments or forbearance agreements is a helpful type of mortgage modification. This is best for those struggling with their finances and budgeting.

Fixed-rate loans.

Another effective way to lower your loan payments is by converting to fixed-rate loans. This option will provide you with a more affordable mortgage rate, especially if you currently have financial issues.

Before you choose from any of these options, make sure to consult your lender or a mortgage expert to ensure you’re getting the most out of your payment modification program.

Applying for a Loan Mortgage Modification

Before anything else, you need to inform your lender about your problem through an online consultation, phone call or personal visit. Let them know why you want to consider a mortgage modification to lower your payments. Below are the essential requirements to process your application:

Hardship letter.

This explains why you are having problems paying your monthly dues and your strategy to rectify the situation. Include supporting documentation with your letter when taking this route.

Documents.

These include bank statements, loan statements, tax returns, pay stubs, and other essential papers to prove your financial struggle.

Expenses.

You need to provide your total monthly spending with specific numbers for items such as food, transportation, and housing.

Income.

You must provide your total monthly earnings and its source.

IRS Form 4506-T.

If you don’t provide your essential tax details, this form will allow your lender to get information from IRS directly.

After filling out forms and submitting your requirements, you can process your application in just a few hours. However, if there are missing information, your application might be rejected or pushed aside. So make sure to provide all requirements to get approved for your loan mortgage modification program.

Bartifay Law Offices

Are you still having doubts whether loan mortgage modification will help lower your payments? Bartifay Law Offices can help you and walk you through the process.

Call us today!

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