A mortgage loan modification can offer some relief for homeowners that are behind on monthly payments by providing permanent modifications to the loan. In fact, homeowners can lower their monthly mortgage payments just by modifying their loan with the loan’s lender.
If you want to make your mortgage payments more manageable by lowering your monthly payment, a loan modification is often the best way to do that. Depending on your situation, you may be entitled to a loan modification with your mortgage servicer that would lower your mortgage payments.
The process can be long and complicated but the results are well worth it. At Denbeaux & Denbeaux Law, we have seen first-hand how homeowners have been able to come back from their financial hardship or avoid foreclosure and make payments more manageable using a loan modification.
Contact Joshua Denbeaux today for a free consultation to see how a loan modification may be able to lower your monthly mortgage payments, and keep reading to better understand if a loan modification is the right decision for you.
Loan Modification Basics
A home loan modification allows you to modify the original loan that you owe to your mortgage lender. This could mean reducing the interest rate, splitting the payments into smaller amounts, or extending the loan to reduce payment amounts.
You may be wondering when you should get a home loan modification to lower your payments. Ideally, the sooner the better, but we understand that not everyone has the knowledge and resources to get a loan modification with their lender before it’s too late. If you’re struggling to pay your mortgage because payments are too high, using a loan modification early can help you stay current and avoid foreclosure.
Here are some examples of times that homeowners should pursue a modification for their mortgage loan:
- When you can’t stay up-to-date on your mortgage payments
- When you receive a Notice of Intent (NOI) to foreclose on your home
- When you are facing an imminent default judgment
In many situations, you may be able to apply for a loan modification up until your home has been sold at auction, though every situation is unique. You may also find that your financial situation is not nearly as bad as you had first thought and might need to go a different direction. Fortunately, there are other resources that homeowners can take advantage of when monthly payments become too much to handle.
Loan Modification Vs. Refinance
A loan modification is not the only option that homeowners have to help them manage their mortgage loan. Homeowners may also replace an existing loan with a brand new mortgage by refinancing the original loan with a new one.
You can refinance your loan if you need to:
- Lengthen the term of your mortgage loan
- Shorten the term of your mortgage loan
- Lock in a lower interest rate
- Change the type of loan you have
Unlike with a loan modification, you don’t need to work with your original lender to refinance your loan. In fact, a refinance allows you to switch to a new lender, if that’s what you want or need to do in order to get your preferred loan.
If you’re already struggling with making payments or have a poor credit history, you may not be eligible for a home refinance offer. You may also find that rates are much higher than your current mortgage and aren’t going to help a whole lot. As well, you’ll have to have more cash on hand to pay closing costs, origination fees, and more on the new refinanced loan.
While refinancing your home can be a good option if you want to get a new loan and have the financial resources to do so, a loan modification may be a better solution for homeowners who are at immediate risk of foreclosure. You should talk to an experienced attorney to understand which option may be best for you and your financial situation.
How Does a Loan Modification Lower Mortgage Payments
Homeowners have a few options available to lower their monthly mortgage payments. It’s important to remember that your lender may not offer all these options, and some may not be the best fit for your particular situation. Generally though, how a modification works on a mortgage loan is by:
- Lowering the interest rate. Your lender can reduce your loan’s interest rate, which will in turn reduce how much you’re required to pay each month. Homeowners may find this to be helpful if current interest rates are lower than when you got your original mortgage.
- Extending the term of the loan. By extending your loan out you’ll have more time to repay the mortgage back. This also means that your monthly payments will decrease, making it much easier for homeowners who are unable to pay their current monthly mortgage.
- Changing the loan structure. If you have an adjustable interest structure on your mortgage loan, you may be able to change it to a fixed-rate mortgage. You can also ask about modifying your loan to a 15 or 30-year mortgage from other kinds, including balloon mortgages This helps homeowners who are on a fixed income and need a more set monthly payment or who may not be able to make large payments
Some homeowners can also qualify for government mortgage modification programs depending on the type of loan you have. These programs are aimed to help offer relief for struggling homeowners, but aren’t available for everyone.
To better understand how you can lower mortgage payments, speak with a loan modification attorney. A lawyer can help guide you through this complicated process and may be able to negotiate with your lender to get the loan modification terms that you need.
Work With a Loan Modification Attorney To Lower Payments
Getting a loan modification is easier now than ever with the help of the new CFPB rules, requiring lenders to put forth their due diligence to help homeowners going through financial hardship. Make sure you have the help you need to guide you through the loan modification process and get the terms you deserve with the help from Denbeaux & Denbeaux Law.
Call today to set up a free consultation and find out how an experienced loan modification attorney like Joshua Denbeaux may be able to help you get a loan modification and save your home from foreclosure and make payments more manageable for the future.