Do you struggle with your mortgage loan payments each month? If so, you have a few different options in how to seek relief. This includes things like bankruptcy, refinancing the loan, and even selling the property. But can you get the relief you need from loan modification? Here are four ways that it could be the answer you're looking for.
1. Changing the Terms
The loan terms—how many months you have to pay back the debt—are usually unchangeable once you sign the contract. However, loan modification may allow you to stretch out the remaining time so as to lower each individual monthly payment. While this results in a longer debt and more overall interest paid, it makes payments more affordable now—when you need the assistance.
2. Structural Changes
Is there some aspect of the loan agreement that makes your payments particularly onerous? Perhaps you took out a variable rate loan in order to take advantage of lower interest rates—but now you face much higher rates. By modifying the variable loan to a fixed rate loan, your payments may be lower and more of that money will go to paying down the principal.
3. Reducing Interest Rates
Could you refinance your mortgage to a lower interest rate now? This may happen because the average rate was higher when you borrowed the money, because your finances have improved, or because your credit score is better now. Whatever the reason, a simple reduction in how much interest you pay each month might provide the relief you need. In this case, modifying a loan may be in the best interests of both you and the lender since it keeps your loan active and avoids extra costs.
Forbearance is an agreement to pause the payment of some existing loan. It doesn't discharge the remaining amount due, but it does allow you some breathing room to get your finances in order. Principal forbearance may allow you to continue paying payments on a portion of the principal while you resolve some issue that makes your monthly budget unmanageable.
Where to Learn More
Could one or more of these changes to your mortgage help you make payments regularly and avoid foreclosure? If so, start by learning more about modification options and the pros and cons of this choice. Meet with an experienced loan modification agent in your state today to get the answers you need to start moving forward.