How to Adjust Mortgage Rates Without Refinancing

The interest rate on your home loan determines your payment, and higher rates raise your mortgage payment. If you encounter financial problems, paying your mortgage may prove difficult. There's always the option of refinancing for a lower rate. But because refinances involve out-of-pocket expenses, financially strapped homeowners may consider a mortgage modification to adjust or lower their rate without refinancing.

Things You'll Need

• Bank statements
• Paycheck stubs

Instructions

1. Take immediate action. Contact your lender's loss mitigation or homeowner's retention department at the first sign of financial trouble. Explain your situation and mention your desire to lower your home loan without refinancing.

2. Gather financial documents. Loan modifications are purposed to help homeowners who endure financial hardships. Gather bank statements, income statements and any other document to show proof of hardship. Show copies of medical bills and divorce papers, if applicable. This additional information helps lender's determine whether you qualify for a loan modification.

3. Default on your mortgage. This is a dangerous move. However, you must be behind on your mortgage to qualify for a modification. Stop submitting monthly payments to get your lender's attention and help.

4. Act professional. Yelling and other types of unprofessional behavior serve no purpose, and this action will turn off lenders. Anticipate a long and stressful process. Be polite and speak calmly while negotiating with your lender.

5. Be realistic. Adjusting a mortgage rate without a refinance doesn't work in every situation. Don't expect an unrealistically low mortgage rate. And if you're already paying a reasonably low rate, bear in mind that your lender may not offer a further reduction.

Tips & Warnings

• Take any money that you would normally send for your monthly mortgage payment and instead set it aside as an emergency fund for yourself. Step #3 explains why you could decide to stop making monthly payments. At this time, your income may be reduced or halted, and you may not be able to put that money away, which is why you applying for a loan modification. But if you can, it would be wise to save any amount that you can which would have otherwise been sent to the mortgage company.

References

• How to Get a Bank to Modify Your Home Loan