A financial hardship may prevent you from making your monthly mortgage payments on time. Your lender may foreclose your home when you default on loan repayment. A foreclosure can lower your credit score and continue affecting your credit record for 7 years. Therefore, when you're facing difficulty to make your home loan payments, you can take help of mortgage loan modification as it can be a feasible option for avoiding foreclosures [http://www.homebuilder-guide.com/mortgage/financial-relief.html].
Mortgage loan modification - What it means
Mortgage loan modification can be defined as a restructured payment agreement between the mortgage borrower and the lender; the lender modifies the terms and conditions of the home loan so that the borrower can afford the monthly home loan payments and pay them on time.
Benefits of mortgage loan modification
One of the greatest benefits of mortgage loan modification is that you can get current on your home loan. Some other benefits of loan modification are discussed below.
* Your lender may reduce the interest rate on your mortgage loan; in turn, it will reduce your monthly mortgage payments.
* The loan term of your mortgage may get extended; it'll also reduce the amount of your monthly home loan payments.
* It is possible for you to convert your Adjustable Rate Mortgage (ARM) to a fixed one.
* Your current loan may include your past due payments, if any.
How to qualify for loan modification
Though mortgage modification can be a feasible option for avoiding foreclosures, yet you need to satisfy certain factors in order to qualify for a loan modification program. Go through the following lines to know how you can qualify for loan modification.
* You should have missed monthly mortgage payments for 3 months consecutively.
* The mortgaged property is your primary residence, that is, where you live most of the time.
* You should have experienced a financial hardship.
* You've not intentionally defaulted on your home loan payments.
* You have not filed bankruptcy.
Documents to produce for loan modification
You need to produce the following documents in order to modify your existing mortgage.
* A letter explaining your financial hardship.
* Proof of your current income that explains your capability to make your mortgage payments as per modified terms and conditions.
* A budget plan that shows how you have planned your monthly expenses.
Apart from loan modification, there are some other ways of avoiding foreclosures, such as, mortgage refinance, short sale, special forbearance, etc. However, you need to explain your financial hardship to your lender so as to work out a feasible repayment option that is best suitable for your financial condition.
Mortgage loan modification - What it means
Mortgage loan modification can be defined as a restructured payment agreement between the mortgage borrower and the lender; the lender modifies the terms and conditions of the home loan so that the borrower can afford the monthly home loan payments and pay them on time.
Benefits of mortgage loan modification
One of the greatest benefits of mortgage loan modification is that you can get current on your home loan. Some other benefits of loan modification are discussed below.
* Your lender may reduce the interest rate on your mortgage loan; in turn, it will reduce your monthly mortgage payments.
* The loan term of your mortgage may get extended; it'll also reduce the amount of your monthly home loan payments.
* It is possible for you to convert your Adjustable Rate Mortgage (ARM) to a fixed one.
* Your current loan may include your past due payments, if any.
How to qualify for loan modification
Though mortgage modification can be a feasible option for avoiding foreclosures, yet you need to satisfy certain factors in order to qualify for a loan modification program. Go through the following lines to know how you can qualify for loan modification.
* You should have missed monthly mortgage payments for 3 months consecutively.
* The mortgaged property is your primary residence, that is, where you live most of the time.
* You should have experienced a financial hardship.
* You've not intentionally defaulted on your home loan payments.
* You have not filed bankruptcy.
Documents to produce for loan modification
You need to produce the following documents in order to modify your existing mortgage.
* A letter explaining your financial hardship.
* Proof of your current income that explains your capability to make your mortgage payments as per modified terms and conditions.
* A budget plan that shows how you have planned your monthly expenses.
Apart from loan modification, there are some other ways of avoiding foreclosures, such as, mortgage refinance, short sale, special forbearance, etc. However, you need to explain your financial hardship to your lender so as to work out a feasible repayment option that is best suitable for your financial condition.