The recent tough economic times have a lot of struggling homeowners fearing that foreclosure may be on the horizon if they do not proactively take charge of their situation. There are, fortunately, alternatives to foreclosure out there. One such option is mortgage modification.
What is Mortgage Modification?
Under certain circumstances, lenders and homeowners may renegotiate the terms of a mortgage agreement. This is called mortgage modification. Lenders stake their businesses on being paid back the money they lent to consumers. When they are stuck with foreclosures, they face losing money on their investment because foreclosures are often sold for far less than they are worth or what the original amount of the loan was. For this reason, they often willing to work with homeowners to determine a solution in which they retrieve the money that they lent in full.
Mortgage modification can involve simply adjusting an interest rate by, for example, changing from a fixed rate to variable rate or vice versa. It could involve changing a mortgage from fixed payments to a balloon payment system. It could also be a complete renegotiation of the payment terms and contract length or a re-evaluation of the house value altogether.
If a situation is not dire yet, concerned homeowners should consider working with their mortgage lenders before taking more extreme measures such as bankruptcy. By pro-actively demonstrating that one is eager to find a solution before a situation gets out of hand, homeowners are likely to find that lenders are willing to work with them.