How to Negotiate a Successful Loan Modification
Negotiating a modification to your mortgage is quite challenging for all parties involved. The bank wants the best rates, while you want lowered payments through longer loan terms or reduced interest. While it may seem as if your lender is playing hardball throughout the process, it is doing you a favor by even considering changing the terms of your loan. No one, not even the federal government, can make the bank modify your loan, so it is in your best interest to negotiate as professionall as possible.
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Instructions
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With foreclosure at an all-time high, lenders aren't as resistant to negotiating mortgage modifications like they once were. If you are proactive and able to ask for a loan modification before your home enters the foreclosure process, you can save your lender thousands of dollars in lost revenue and fees; making it more likely to negotiate the restructuring of your loan.
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Don't be confrontational during the process. Too often, people look at the negotiation process as something that must be confrontational. In reality, nothing is further from the truth. Instead of fighting your lender throughout the negotiation process, enter into it with the mindset that the two of you are working together to find a win-win solution to your problem. If you consider yourselves adversaries, the conversation will be a very different and much less effective.
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Facing your financial situation can be emotional. Add to that the stress of trying to convince your lender to let you off the hook for some of your debt, and you can quickly find yourself showing too much emotion. Don't let your pride, your sorrow or even your frustration get in the way. Keep your emotions in check with every bank representative you speak with. Some will be easier to handle than others, so be especially careful when dealing with the more difficult personalities.
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Don't be afraid to ask your lender what you need to do to get your loan modified, then be willing to do it. If that means selling your car or giving up your cell phone, by all means, agree. Some lenders don't ask their clients to make lifestyle changes to get a loan modified, but some do. Be prepared for either scenario.
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Tell the lender what you want. Now is not the time to beat around the bush. If you want your interest rate lowered to 5 percent, say so. If you need a payment under $1,200 a month; tell the bank. If there was ever a time to know exactly what you need and communicate it, this is it.
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Offer several options to the problems at hand. Sure, you may want a 2 percent interest rate, but if you let your lender know you'll take a 4.9 percent interest rate or a term extension as long as your payments are less than $1,500, you're more likely to get what you want. Show your lender that you've done your homework and know what you want and need by offering them several solutions.
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Tips & Warnings
Note that no matter what, not all loan modifications will be approved.
