Best Mortgage Help Programs – Loan Modification

Best Mortgage Help Programs

Are you having some difficulties in paying your mortgage? Don’t worry, being behind mortgage payments because your mortgage rates have become un-affordable is actually a common scenario.

If you are in this situation, you might want to get a loan modification to reduce the monthly payments of your mortgage. In loan modifications, a bank or any lender
would agree to change the terms of your mortgage to be easier for you to pay.

Availing for a mortgage loan modification might entail the extension of your loan term, the lowering of your interest rates to be more affordable, or switching from an adjustable-rate mortgage to a fixed-rate loan.

The changes to the loan plan would be decided by the lender, but it would lead to more affordable monthly payments to help avoid foreclosure. A loan modification is significant for struggling homeowners to bring down their mortgage payments to more manageable and affordable levels.

WHO IS ELIGIBLE FOR A LOAN MODIFICATION?

The banks or the lenders would decide and set the guidelines and processes involved in determining someone’s eligibility for loan modifications. Not everyone struggling to pay their mortgage can avail themselves and are eligible for loan modifications; however, if you manage to meet the set requirements and criteria, you will be able to get one.

There is no unified standard for determining who is eligible for a loan modification. However, banks and lenders usually have similar patterns and guidelines for assessing someone’s qualifications for a mortgage loan modification.

Generally, lenders would look into your financial status; they will evaluate your income, economic circumstances, and loan payment. Lenders would also look into your background as to why you might need a loan modification.

They will check if you have experienced any valid economic hardships like; losing your job, the death of your spouse, and other valid reasons as to why you need to change your loan terms.

Your ability to repay the loan would also be taken into consideration. The lenders would, of course, want you to repay your loans, so they check if you have a source income that could be used to repay your loans, even if your income amount is now less than what it used to be when you initially took the loan.

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WAYS TO MODIFY YOUR MORTGAGE PLAN

Here are the several ways your bank or lender could modify your mortgage plan:

REDUCE INTEREST RATES

Reducing the interest rates for your monthly mortgage payments can help you save a lot of money and allow you to pay your loans. Naturally, lowering the interest rates for any mortgage would lead to lower monthly payments. However, the lowering of interest rates could come with a counterbalance of increased loan term length.

EXTENDING LOAN TERMS

Lenders could extend the length of your loan term to make it more affordable in terms of monthly payments. If your mortgage of $100,000 with a 4% interest is to be paid in 25 years, you would have a monthly payment of $528.

However, if that same mortgage is to be paid in only 15 years, your monthly payment would reach $740. So, it is naturally more affordable in terms of monthly payment to have a longer loan term.

However, you should remember that you will have to pay a more significant interest over the entire lifespan of your loan if you extend it. It would be cheaper short term but more expensive in the long term.

SWITCH FROM AN ADJUSTABLE-RATE MORTGAGE TO A FIXED-RATE MORTGAGE

Changing to fixed rates from adjustable rates is an important thing to consider for your mortgage. The switching itself might not lessen your current payments, but it might just protect and help you in the future from rising interest rates.

Adjustable rates change depending on the market. If your initial rate is at 3%, but the average market rate rises to 4%, your rate will also increase. Staying in Adjustable-rate for your mortgage could mean that you would have to pay the higher interest rate over the lifespan of your loan.

ADD LATE PAYMENT FEES TO THE PRINCIPAL AMOUNT

If you were behind in your monthly payments and have acquired late payment charges, then your fees might be added to your principal balance. As such, the monthly payments would be more affordable because the amount you have to pay would be spread over a large time span.

Lenders can use and combine these actions to lessen the borrower’s monthly mortgage payments and make them more manageable and affordable for them.

This flexibility of being able to choose how to lower the loan payment is one of the reasons why loan modifications are among the best mortgage help programs.

HOW TO APPLY FOR LOAN MODIFICATION?

Homeowners that are struggling and are experiencing financial hardships due to valid reasons, so it is difficult for them to meet payment deadlines or actually afford to pay the mortgage, can contact their bank or lender to inquire and avail of a loan modification.

Making contact with your bank as soon as possible would be beneficial to you because you will have a better chance at negotiating with your lender at an earlier stage of the foreclosure process than if you wait for you to be way behind in your payments.

Ready your required paperwork like; mortgage and property information, a hardship letter of an affidavit, expenses and income financial worksheet, recent bank statements, and tax returns.

The lender will review your loan modification application together with the other supporting documents; if you manage to meet program criteria and guidelines, your exiting loan will be modified to meet your needs and income.

Your loan modification application can be denied by your lender or bank. Usually, the reasons for not qualifying may include; not providing sufficient or valid evidence of your financial hardship, a large debt compared to your income, and many more.

If your loan modification is denied, then you can still make an appeal for them to reconsider. You should inquire about the appeal deadline and the reasons why your application was rejected so as to improve your next appeal case.

Hope you found something in Best Mortgage Help Programs to help with your particular situation.

Disclaimer: This article is meant for educational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.

Best Mortgage Help Programs

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