When you are facing foreclosure, a great help to your unstable financial situation is the possibility of obtaining a mortgage modification. This is when the original terms of the mortgage on your property are altered so you can make more affordable payments on time. Naturally, for this to become a reality, both you and the lender must agree on the new modified conditions before they can go into effect.
Before you even get enveloped in the mortgage modification process, see what you can do in your own life to better your financial situation. The more money you have to offer the lender on a regular basis, the better chance a modification will be accepted. Do what you can to bring more money in each month and cut unnecessary expenses. There are non-profit counseling services to guide you in these endeavors.
If you determine that you can make no further cuts in your budget and you still cannot make your mortgage payments, you need to meet with your lender to negotiate terms. The fact that you have attempted to reduce your bills to the bare minimum may help to influence the bank that you are serious about saving your house. Talk with them directly to discuss their specific mortgage modification requirements and whether you can qualify.
Inform them truthfully and completely about your predicament and ask what may be Done to help you in your tough situation. The more information the bank or servicing company has, the more likely it will be able to understand your situation and present a reasonable solution. Banks would much rather help you reach more affordable circumstances and still get some money from you than foreclose your home and be done with it.
There are many requests you can make of your lender. You might ask them to hold your payments until you get on your financial feet again. This is most likely to be accepted to if you had unanticipated expenses like medical bills that will pass and be over with in the coming months. Other examples may be making partial payments for a while, or putting the missed payments on the back end of the loan.
If your current mortgage is an adjustable rate mortgage, or ARM, and it currently has higher monthly payments than fixed rate mortgages, request that your contract be altered and your loan switched to the plan with a lower rate. To be accepted, you must show your ability to pay the newly changed amount. Many of the current foreclosures were initiated by resetting ARM payments, and lenders have been willing to reduce interest rates to more affordable levels for proper loan modification applicants.
The most important thing to remember is that a lender will not go through the trouble of changing terms if you will still be unable to make timely payments. However, with a little bit of work, you can reduce your monthly expenses and then get to work lowering your payment so you can hold onto your house for the long term. Soon, with proper communication and negotiation skills, you will be out of your problem and back on more fixed financial grounds.
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