How to Get a Mortgage Company to Lower Your Interest

You can pay less each month by reducing your mortgage loan's interest rate.

Reducing your interest rate can make a significant difference in the size of your monthly mortgage payments. Usually, lowering your interest rate requires you to refinance your mortgage loan. You can get around this if you can prove that you have suffered a financial hardship that makes paying your current monthly mortgage bill impossible. In this case, you might be able to persuade your lender or bank to lower your interest rate as a way to also lower your monthly payments.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• Current mortgage loan statement
• Savings and checking account statements
• Credit card bills
• Student, car, personal or other loan statements
• Most recent federal income tax return
• Two most recent paychecks

1. Build the evidence that you have suffered a financial hardship that is severe enough to make paying your current mortgage bill unrealistic. Gather and copy the papers that prove that your gross monthly income has fallen while your monthly debt obligations have not: your most recent federal income tax return, last two paychecks, credit card bills, other loan statements and savings and checking account statements.

2. Write what is known as a financial hardship letter. You'll eventually send this letter to your lender or bank. In it, spell out exactly why you are struggling to pay your current mortgage bill each month. You may have lost a job and have taken on a new one that pays less. Maybe your employer has slashed the amount of hours you can work each week. Maybe you've suffered a serious illness or injury. Also include in the letter your request for a lower interest rate that will lower your monthly mortgage payment.

3. Call your lender or bank at the customer service number included with your most recent mortgage loan statement. Ask to speak to a supervisor. Explain to that person that you have suffered a financial setback that has made paying your monthly mortgage bill impossible. Request an interest rate reduction. Ask if your lender is participating in the federal government's Home Affordable Modification Program, a program that provides financial incentives to lenders that modify the home loans of struggling homeowners. Your lender isn't required to participate in this program to lower your interest rate, but if it is, it might speed up the process.

4. Send to your lender your hardship letter and the copies you made of your financial statements. Your lender will study these to determine the severity of your financial hardship.

5. Agree to an interest rate reduction, if your lender approves your request. Make sure that with the reduction you can afford the monthly mortgage payment.

References

• Bankrate.com: Mortgage Calculator
• Home Affordable Modification Program: Qualification checklist
• U.S. Department of Housing and Urban Development: Home Loan Modification Questions