How to Convince Your Lender to Lower Your Home Mortgage Interest
If you're struggling to pay your mortgage loan each month, you're far from alone. One in every 417 U.S. housing units received a foreclosure filing in November of 2009, an 18 percent increase from one year earlier according to foreclosure tracker RealtyTrac. One way to lower your mortgage bills and to avoid foreclosure is to convince your lender to lower the interest rate on your mortgage loan.
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Things You'll Need
- Copies of your credit card statements
- Copy of your most recent mortgage loan statement
- Copies of your savings and checking account statements
- Hardship letter explaining your financial struggles
Instructions
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Call your mortgage lender immediately---using the contact number on your most recent mortgage statement---if you begin to fall behind on your mortgage payments. Call even if you're worried that you might fall behind on these payments.
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Tell the representative who answers that you'd like to modify your mortgage loan so that your interest rate is lower. Explain that you're interested in a "modification" and not a "refinance."
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Spell out the reason why you're struggling to pay your mortgage loan each month. You might have lost your job. You might be working fewer hours. Maybe you or someone in your family has gone through a serious and costly injury or illness.
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Ask directly for a lower mortgage interest rate. Rates are low today; dropping yours down a point or more can lower your mortgage payment by hundreds of dollars a month.
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Write a hardship letter if your mortgage lender requires it. This letter will explain, in writing, the reasons for your financial difficulties. Not all mortgage lenders will ask for this. When you complete this letter, mail it or fax it to your lender.
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Mail or fax the paperwork that your lender will rely on to prove that you are suffering through a financial hardship. This paperwork includes your credit card bills, your recent mortgage statement and your bank savings and checking account statements.
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Tips & Warnings
The federal government is encouraging lenders to work with struggling homeowners to help them reduce their mortgage payments each month. It's part of the government's Making Home Affordable program, which has a goal of reducing the number of foreclosures sweeping across the country.
There's no guarantee that your lender will reduce your interest rate. Your lender may decide, after looking over your paperwork and considering your financial situation, that you don't need a lower rate to make your monthly payment. A new study from the Federal Reserve Bank of New York states that loan modifications work better when lenders reduce the principal of homeowners' mortgages, not just the interest rates.
