When it comes to mortgage modification, there are a variety of factors to consider – especially those unique to your own situation. When applying for the modification process, it’s important to know what such a process might entail for you, both in the short-term and also for your financial situation longer down the road. In order to avoid foreclosure, make sure the mortgage modification you’re considering is right for you.
Knowing the good and the bad when it comes to mortgage modification can be key to making the process easy for you and reasonable for the property, and your family in the longer-term. Your house is your home and knowing that you can keep it through loan modification is good, but knowing you won’t lose it due to mistakes in the process is extremely important.
What is Mortgage Modification?
First, you should have a firm grasp on just what mortgage modification is, really. The term “mortgage modification” describes any process by which the original terms of the contract agreed to by the lender and borrower are altered or modified. These modifications can deal with size of payments, length of mortgage term, or any other factors involved in the initial loan, and can help to avoid foreclosure.
Generally, payments are composed of both the initial mortgage loan as well as interest on that loan. Size of payments and the duration of the payment term are all established by the initial loan contract. Any change to these terms is actually a mortgage modification already, but to deal with debt problems or any other financial issues, a larger modification of your mortgage terms might be required.
The Dos and Don’ts
It’s important to know the original terms of your contract before considering a loan modification. Before negotiating new terms, know the original agreement back to front. Every single part of it can be important. Know the terms, know the duration, and know anything else agreed to in the original contract.
You don’t need to already be late in your mortgage payments to consider mortgage modification. A mortgage lender in any state of payment – current, late, in default, etc. – can consider the loan modification process. Even lenders already in bankruptcy can consider a modification of their pre-existing mortgage.
In order to apply for modification, you will need to establish a genuine financial hardship that impairs your ability to pay your mortgage. Medical debts, decline in household income, rising expenses, and other factors will be considered as hardships in your application. Establishing these problems will be a major key in getting your modification application considered. Without them, you could face an understandable rejection. Know your situation and if you really do need the process.