Modification Of Mortgage - The Hows And Whys Of Mortgage Modifications

Mortgage modifications (also referred to as a "loan modifications") may be a solution for homeowners facing a difficult financial situation. A modification is a change in one or more terms of an existing mortgage loan. Before considering this solution, it is important for a borrower to understand modification of mortgage procedures before contacting their lender. Depending on your situation, you may want to consider seeking guidance from professionals in this area.

WHY? Homeowners typically consider changes to their existing loan terms to obtain a lower monthly payment and avoid defaulting on the loan. By lowering the monthly payment, the homeowner can stay in their home and have a loan payment that fits within their budget. Changes in terms may lower the interest rate, lengthen the repayment term, or reduce late fees. Banks are willing to consider modifications to avoid the costs associated with the foreclosure process.

HOW? Decide whether you are going to handle the mortgage modification yourself or use a professional (such as an attorney) to negotiate with the lender. Modification of mortgage procedures can vary from one lender to another. If you are handling the modification yourself, learn about your lender's process (and modifications in general) before contacting the lender. The lender's employees handle loan modifications every day, so you need to understand how to work with the lender and negotiate a favorable result for yourself.

For most lenders, a loss mitigation department handles mortgage modifications. This department will have guidelines defining the modification of mortgage process for the lender. If you are handling your own modification, be sure you understand these guidelines and provide the lender with the required information. Also, keep written records of your telephone conversations and other dealings with the lender.

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