How to Restructure a Home Loan
Restructuring a home loan is a sensible idea if you're at risk of losing your home due to money problems. Different options are available to homeowners who wish to alter their mortgage term and lower the payment. Mortgage refinances are common in this situation, but not everyone qualifies for a refinance, and this process involves closing fees. With a restructured or modified home loan, you can receive better terms and avoid foreclosure.
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Instructions
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Request mortgage help before you default on the loan. Lenders help borrowers who have already missed payments, and those at risk of missing payments. Keep lenders aware of your financial problems, and don't wait until you're nearing foreclosure to request help.
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Provide information on assets. Give your lender copies of bank statements and paycheck stubs so that they can review your finances to see if you're eligible for a restructured home loan. According to Bankrate.com, lenders consider how much you spend on housing each month to determine if you meet the qualifications. House payments greater than 31 percent of monthly income helps you qualify.
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List your debts. Mortgage lenders restructure home loans as a last resort to avoid foreclosure, and they don't approve everyone for this provision. Being financially overextended or overwhelmed with debt payments makes you a good candidate for a modified home loan. Write out monthly expenses and forward this list along with your financial information to the lender for review.
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Document your financial situation. Explain why you fell behind on payments, or why you're at risk of falling behind. Lenders need to document the reason(s) for payment problems, and they ask borrowers to write a hardship letter. Tell your story and provides details on why you can't make your mortgage payment. Good reasons for default include a layoff or unemployment due to illness or injury.
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