Loan modification as a worthy foreclosure alternative – Valid reasons to go for it

Have you been struggling to make your monthly mortgage payments due to lack of cash in your account? With the rise in the number of debt obligations, there are too many cash-strapped homeowners who are losing their home-ownership rights to forced foreclosures by the bank or the mortgage lenders. Did you know that you’re able to alter the terms of your current mortgage loan in order to facilitate the entire repayment schedule and avert the risk of losing your home to a foreclosure? Modifying your home loan can offer you better terms and conditions through which you can repay your loan with ease. If you’re not aware of the valid reasons of a possible loan modification, here are some of them.

  • To lower the interest rate of the loan: Most often it is seen that the borrowers fail to pay off their mortgage loan due to the outrageously high interest rates that are charged on the loans. When the problem is with the interest rates, they can be easily lowered through home loan modification. You have to negotiate with your mortgage lender, tell him about the reason behind your mortgage default so that he doesn’t hesitate to lower the interest rate of the loan.
  • To alter the repayment term of the loan: In order to lower the monthly payments of the mortgage loan, the mortgage lender may also alter the repayment term of the loan. If you had initially taken out a 15 year term mortgage loan, you can request the lender to increase the term to either a 20 year loan or a 30 year term loan in accordance with your repayment ability and budget. You can considerably save a portion of your income through loan modification.
  • To change the type of loan: Most borrowers are initially intrigued by the adjustable rate mortgage loans as they offer lower rates in the beginning. However, little do they know that these low rates are only for a certain period of time, known as the introductory period and when this period ends, the borrower may be subject to an interest rate hike. Therefore once you approach the lender, you can change the loan kind to a fixed rate mortgage loan to be sure about the monthly payments throughout the term of the loan.
  • Helps avoid foreclosure: Once you can avoid foreclosure, you can be sure about retaining your home-ownership rights and this is possible through loan modification. Start making the payments yet again after modifying your home loan so that you don’t hurt your credit score.

Thus, if you’re struggling to make payments towards your mortgage loan, you may opt for home loan modification. Effectively negotiate with your lender so that he agrees to modify your home loan according to your convenience.

Comments are closed.