What is a Mortgage Modification?
For those struggling to keep up with mortgage payments, it can feel like your options are limited when it comes to fending off a foreclosure, but in truth there are numerous alternatives that can help offer relief to the monthly burden you’re facing. One commonly used method is to seek a mortgage loan modification.
What Happens When You Modify Your Loan
A mortgage modification changes the repayment terms of your existing home loan and ultimately lowers your monthly payment. A mortgage modification is different from a mortgage refinance in that you are changing the terms to an existing loan, rather than replacing it with a new mortgage.
The end result is that your monthly payment obligation will be more affordable, however, the modification may affect your credit score and the overall amount of interest you pay on the life of the loan.
There are several ways that your mortgage may be modified depending on what your lender agrees to. Examples include:
- Extending the length of your term
- Adjusting your interest rate
- Changing from an adjustable-rate mortgage to a fixed-rate loan
Mortgage modification may be an option for people who are not eligible for refinancing, who face a long-term hardship, and/or are already several months behind on payments. Lenders may be open to negotiating a modification prior to having to pursue a foreclosure, as foreclosure are also expensive for them.
With any debt, taking action early is far better than ignoring the problem, however tempting that may be. We here at Jacobs Legal can help you negotiate a workable solution for you and help protect you and your home from foreclosure. Get in touch with us to schedule a confidential consultation.