How to Ask for a Mortgage Rate Reduction
If you have a home mortgage you can't afford and you want to avoid foreclosure or bankruptcy, there are alternatives to traditional refinancing. By working with your bank to reduce the amount you have to pay each month, you can survive financially tough times and still keep your house. Know your facts, especially about the Making Home Affordable Law, before you go to the bank to request a reduction of your mortgage payments. The more information you have, the better the result will be.
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Instructions
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See if you qualify for the Making Home Affordable Law, which passed in April 2009. It allows people to seek a reduction in the mortgage interest rate on loans owned or backed by Freddie Mac or Fannie Mae if their payments are above 31 percent of their gross income and if there has been a change in the interest rate or a change in employment status. The bank is required to change the rate or restructure the monthly payment schedule, although there are certain conditions. For example, the amount of your loan cannot exceed 125 percent of the current value of the home.
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Decide how much you can pay every month. Banks are often willing to work with borrowers to help them pay off their debts without defaulting, but you need to have a reasonable monthly payment plan in mind when you come in to negotiate. This will help streamline the process and will allow the bank to suggest an alternative payment scheme that is right for you.
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Many large banks want to avoid foreclosure because they will lose money if they have to resell the home for less than its value. Banks have resources and services that can help borrowers find a plan that allows them to keep their house while paying less on a monthly basis. Call and ask about alternative ways to make your mortgage payments.
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Hire someone to negotiate. If the bank is not open to working with you to adjust your monthly payments, you can ask someone to negotiate on your behalf.
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Show that you are willing to work with the bank. Provide any information that it requests (pay stubs, tax returns, etc.). Remember, this is a business deal, so don't take any requests for information personally.
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