How to Save Your Home from Foreclosure with Mortgage Modification

Mortgage modification is when a lender changes the terms of an existing home loan to make payments more affordable for the homeowner. With the dearth of mortgage loan funds and strict qualification requirements, many homeowners are unable to refinance out of their adjustable rate mortgages. Mortgage modification is becoming more and more popular as banks struggle to minimize financial losses and homeowners struggle to keep their homes. Here’s how to save your home from foreclosure with mortgage modification:

Difficulty: Moderately Challenging

Instructions

1. Contact your lender to find out what mortgage modification options are available, and what you will need to do to qualify. Mortgage modification most often involves lengthening the repayment term of a loan, lowering the interest rate, temporarily deferring payments, or a combination of these approaches. For some lenders, documented financial hardship is enough to consider loan modification. For others, the homeowner must be seriously delinquent in payments to qualify for mortgage modification.

2. Gather the required documentation. Most often this will include proof of current income, a financial plan that explains how mortgage modification will enable you to make timely monthly payments, and a written explanation of the factors that led to your difficulty in making payments. Some examples include job loss, care of a sick relative, your own illness, divorce, or market conditions that prevented you from refinancing out of your high interest rate adjustable mortgage.

3. Take stock of your finances, and figure out how much you can realistically afford to pay on your mortgage each month. You will need to know this to find out if there is anything your lender can do for you. While mortgage modification can come to the rescue of many homeowners, in some cases a homeowner simply cannot afford to pay a mortgage.

4. Take care in negotiating with your lender. There are often community resources to help negotiate with your lender for free or at a reduced cost; try contacting your local consumer credit counseling service for a referral. Utilizing the services of a negotiator will ensure that you don’t slip up and say the wrong thing to the lender. It is very important to convey to the lender that a mortgage modification will ensure that you get back on your feet. A lender may feel that mortgage modification is a waste of time and money if the lender thinks you’re likely to default on the loan anyway.

Tips & Warnings

• The best way to convince your lender that you are a good candidate for mortgage modification is a solid financial plan. Make sure you know how you will pay your mortgage on time in the future.
• Don’t purposely default on your loan to obtain a mortgage modification. This could backfire and result in the loss of your home. Lenders require documentation of the hardship that led to your financial difficulty, and lenders are not required to modify your mortgage.

Resources

• Can Mortgage Modification Save Your Home from Foreclosure?

[marysusanallen]

on 5/12/2009 Great article. Great tips. Keep posting. Also, homeowners might findhttp://alturl.com/72hbhelpful. They can help you with your loan modification needs.