facebook-squarelinkedin-squaremenumobiletwitter-squareyoutube-square

Will a Loan Modification Lower Our Payments?

Will a Loan Modification Lower Our Payments?

Will a Loan Modification Lower Our Payments?

If you’re looking to alter your mortgage payment or you need some form of a loan modification, you’re probably wondering what it is, how it can help, and what this means for your credit and your finances moving forward. One of the common questions I get is will a loan modification lower your payments?

Loan modification

A loan modification is a modification or a change to the original terms of your mortgage. If you’ve had a financial hardship or if you have a high risk of losing your home based on medical bills, job loss, or financial change, your lender may allow you to modify your existing mortgage. The goal is to reduce the monthly payment for a time or permanently in order to keep you in the home until things get better.

There are several different directions for loan modifications.

Principal reduction – This is where your lender will eliminate a portion of the debt allowing you to repay less than you originally borrowed. Your lender will recalculate monthly payments based on a decreased balance. Most lenders are very reluctant to do this so you’re likely to have them alter other features of the loan instead of lowering your principal amount.

Lower interest rate – Your lender may reduce your current interest rate. This can also reduce your monthly mortgage payments and save you money over time. Sometimes these rates are temporary or they can be negotiated to be permanent for the life of the loan or Intel the borrower refinances or sells the property.

Extended terms – This is where your lender will extend how many years you have to pay the loan back. This will lower your monthly interest rate but it will be more costly over time since you be paying more in interest. This option is also referred to as a re-amortization.

Fixed-rate – Your lender may switch you from an adjustable-rate mortgage to a fixed-rate loan in order to keep you in the home and keep the monthly payments the same rather than going up or down based on the interest rates.

Postpone payments – Your lender may allow you to skip a few payments, which is a good temporary solution if you have a job change, job loss, or you have medical expenses that need to be paid first.

What happens if your lender refuses to talk to you about a loan modification? Contact our office today. We handle a lot of different cases with mortgage modification and loan modifications to keep you in your home and keep your payments low.

425-452-9797

More:

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • How Bad is Bankruptcy Really?

    How Bad is Bankruptcy Really?

    Filing for bankruptcy means telling the judge that you cannot pay off your debts. After this is done, the court checks your assets and liabilities then decides if you are eligible to have your debts cancelled or discharged. If it is seen that you have no means to pay back, they let you declare bankruptcy. […]Read More »
  • What Do You Lose if You Declare Bankruptcy?

    What Do You Lose if You Declare Bankruptcy?

    Before you finally go to the judge or court to file for bankruptcy, the major worry to have is what you stand to lose. It might be your house, property, a potential job, or client as the record of your bankruptcy is available to public access. Bankruptcy is the last resort when the debt starts […]Read More »
  • How Far Behind Do I Have to Be For Mortgage Forbearance?

    How Far Behind Do I Have to Be For Mortgage Forbearance?

    Under normal circumstances, there are policies owned by all lenders, and that is what you should be working with. However, if you are finding it difficult paying you mortgages either due to lose of job or increase in costs. There is a 15-day grace period, and if you are able to meet up and make […]Read More »
  • Can I Claim Forbearance 4 Months Into COVID-19?

    Can I Claim Forbearance 4 Months Into COVID-19?

    The whole world is facing a pandemic that is not just making life different for all of us but it is equally causing major financial problems for some individuals. Individuals and countries are facing financial hardship in this coronavirus crisis. Forbearance is when your lender or mortgage servicer allows you to temporarily pay your mortgage […]Read More »