When homeowners find themselves in over their head when it comes to the matter of paying off their mortgage, the first thing most people try is contacting the lender. Often, with the right amount of negotiation, you can get the bank to either temporarily or permanently lower the interest rates you pay on your mortgage or even the principal amount that you own on your home. This can help a beleaguered homeowner avoid foreclosure.
What To Know
Of course, there are some things that you should keep in mind when going about getting a home loan modification. The first thing to keep in mind is that it might not work. Many people who try and get home loan modifications end up reporting stories of abject frustration and unreturned phone calls. There is also the chance that the bank will say no, even if you can get a representative on the phone.
Another thing to be wary of is the dreaded “option ARM.” Banks like Chase and Bank of America are starting to change their parameters on these, but previously it was possible to pick a monthly payment that was so low that the person holding the loan would be even deeper in debt.
So, while having high payments and high interest rates is never an enviable position to be in, not all home loan modifications are equal. Be sure to do plenty of research before accepting or asking for a home loan modification – and then make sure that the modification is for better, not worse!