If you are struggling to keep up with your payments on your loans and other debts, you know this can affect multiple areas of your life. In addition to the stress you feel regarding your financial obligations, you may also experience unpleasant consequences that include phone calls from debt collectors, wage garnishment and threats of foreclosure. You know it is important to regain control of your financial situation as soon as possible.
There are several options available to those who may be struggling with past-due mortgage payments. One of these includes loan modification, which is a change to the original terms of the mortgage loan set forth by the lender. This could provide you with more affordable payments or other terms that will allow you to catch up on the balance. Before you make a decision regarding loan modification, you may benefit from learning about all the options available to you.
The benefits of changing your loan
The lender has the final say on whether or not to give a borrower a modification of his or her loan, but this option could be available if you are unable to pay off the loan otherwise. There are several ways to modify a mortgage, depending on the lender, the details of the specific loan and other factors. These include:
- A change in the interest rate so that the unpaid balance does not accumulate as quickly
- An extension in the amount of time the borrower has to repay the loan
- An offer of a different type of loan that may be more suitable for the borrower
It is also possible that a modification could include elements of all these options. A lender may grant a modification in cases where it is clear that it is less costly to agree to new mortgage terms rather than a charge-off of the remaining balance.
Your best financial future
Before you sign any important financial documents or make choices that could impact your future, you will benefit from an explanation of all the options available to you. A careful look at your specific situation will help you understand how to seek modification terms that will make a meaningful difference for your financial future. This step could help you save your home and take steps to achieve long-term stability and security.