When people are unable to make payments on their home, they may worry that the bank will foreclose on their house. People may be able to prevent foreclosure by modifying their mortgage.
If people get a mortgage remodification, they change the terms of their current loan. Nerd Wallet says that lenders may modify a loan in several different ways. If people have an adjustable-rate loan, then a lender might convert it to a fixed-rate loan. Lenders might also lower the interest rate or lengthen the loan so people have more time to pay it off. Sometimes a modification may be temporary. In this situation, the mortgage will return to the original terms after a set period of time.
How to qualify
People can get a mortgage modification if they experience financial difficulties. According to Forbes, these financial difficulties can include illness, loss of income or divorce. People should usually speak to their lender as soon as they realize they cannot make their mortgage payments. Lenders can work with people to determine if a loan modification is their best option.
How to apply
People typically need to fill out a loss mitigation form if they want to modify their mortgage. They may have to include information about their home and their mortgage and submit a breakdown of their income and expenses. Additionally, people may need to provide copies of their tax returns and bank statements. All this information helps a lender understand a family’s financial situation and determine what type of modification they need.
Sometimes a lender might deny a loan modification application because a person has too much debt. In this situation, people can appeal the decision.