Many people facing financial hardships begin to feel trapped by, what seems like, a lack of options. As debt begins to add up and money becomes tight, finding a way out of your debts and protecting your assets can be overwhelming. For many people bankruptcy can provide the debt relief they need while also protecting much of their assets. However, bankruptcy is not for everyone and, often, there are other solutions to your debt problems
The same is true for missed mortgage payments. When you get that notice of foreclosure in the mail, you don’t have to feel pressured or hopeless. In fact, there are other options to keep your home while working to repay your missed mortgage payments.
Mortgage Loan Modification
Mortgage lenders offer a few ways to help borrowers get caught up on their mortgage payments without losing their home. A mortgage loan modification can change the terms and conditions of your mortgage loan in a way that results in lower monthly payments. Many modifications involve lowering the interest rate associated with the loan, such as refinancing. Others may reduce the principal amount owed on the loan or extend the life of the loan. These modifications can reduce the monthly payments enough to fit the borrower’s budget.
Why would the lender want to help me?
The lender is at risk to lose much more of the money they loaned for the house if the house enters foreclosure. In a foreclosure, the lender takes possession of the property and must sell it in order to recoup their money. In most cases, the lender will not be able to sell the house for the amount that is defaulted on the loan. The lender must also invest more time and effort into the property, costing them more money in the end.
Modifying the terms of an existing mortgage allows the lender to help the borrower while minimizing the risks associate with foreclosure. Furthermore, mortgage modifications can increase the chances that the current borrower gets caught up on the loan; maximizing the chances the loan gets paid off in the end.