How to Negotiate a Loan Modification

Hard financial times can cause unanticipated challenges in paying a mortgage. It is possible to contact a lender to apply for a loan modification to change the term, rate or payment. A modification can reinstate a loan after a delinquent payment history and allow you to keep your home.

Instructions

Difficulty: Easy

1. Write down your budget. Include all expenses and all income. For example, the lender will want to know if you have a renter in the basement or you if you pay a lot every month for prescriptions.
2. Decide on a figure that you can live with so you have something to measure the lender's offer against. Be persistent in asking questions. If your income supports the modification there will be some gray area to negotiate your offer.
3. Examine whether you would be willing to accept a short sale on the property. Selling your house for less than you owe is an alternative to foreclosure if even a modified payment is unaffordable.
4. Plan on fulfilling a down payment, forbearance plan or 3 months good faith payments before the lender will consider your application. These terms will be lenient if the lender thinks you will qualify for the modification.

Tips & Warnings

• Don't employ a negotiation agency that specializes in foreclosure or forbearance. The cost will be added to your loan. Lending professionals are familiar with explaining the process.
• If you currently have an interest only loan, your modified payment would include principal and interest. This will increase rather than lessen your payment. You will not qualify for a modification if your income doesn't support an increase.