How to Modify Your Home Loan

Understanding the best ways to modify your home loan requires financial expertise, especially when you’re facing a foreclosure. Here’s a look at how to modify your home loan.

Ask Questions

When you need a home loan modification, don’t waste any time getting in touch with your mortgage lender, advises Find out how they’re helping other homeowners who are having trouble paying their mortgage and how you can apply for a loan modification. It’s also helpful to determine how a loan modification relates to potential foreclosure proceedings and to find a straightforward way to communicate with your lender, states Forbes.

Get Organized

Put as much information as you can in writing. Determine the value of your home, which most likely needs to come from a real estate professional or an appraiser, And write up a hardship letter outlining your current financial situation. You’ll also need to provide loan modification documents such as bank statements and tax information, as well as other paperwork that proves your financial hardship.

Get Assistance

Keep in mind that a loan modification isn’t a simple process and can require extensive loan modification forms and other paperwork, states U.S. News and World Report. So it may be helpful to seek the assistance of a professional who specializes in home loan modifications laws. Make sure the individual is qualified to help you and has the certification or license to provide the services you require. Meet with this person and find out the extent of their experience helping others avoid a home foreclosure with a loan modification.

Avoid Scams

People seeking loan modifications are usually faced with financial hardship, which means that they can easily fall prey to unscrupulous financial advisors, reports U.S. News. Yes, there are plenty of scam artists who claim they can help you meet your mortgage payments and avoid a foreclosure. Before doing business with any type of financial service provider, do some research and make sure the company is reputable.

Analyzing an Offer

If you receive an offer for a loan modification from your mortgage lender, carefully consider your options, especially regarding paying penalties and potential balloon payments on the horizon that you may not be able to afford. Get a loan modification calculator and understand that your lender is amending your current loan — either by adjusting its length, interest rate or amount due — to help you get back on track with your monthly payments. However, this isn’t the same as refinancing your loan, which means that in the long run, a loan modification may mean you have to pay more and the lender comes out ahead, states U.S. News.