Struggling to pay your mortgage can be very stressful for homeowners. The good news is that there are a variety of mortgage loan modification options available. These modifications are usually short-term changes to mortgage payments intended to help homeowners recover from financial hardship and catch up on their mortgage payments.
Mortgage lenders typically have some sort of application process for mortgage modifications. By following one of these options, you can work with your lender to make your mortgage more manageable and stay in your home.
If you’re considering a mortgage modification, it’s a good idea to work with a foreclosure attorney that you trust. An experienced attorney understands the mortgage modification process and can help you determine your options and the best choice for you.
Denbeaux & Denbeaux Law has helped hundreds of New Jersey homeowners stay in their homes. If you’re in need of an attorney to help you through a mortgage modification, contact us today to find out more about how we may be able to help you.
Types of Mortgage Loan Modifications
There are a lot of mortgage modification programs available. What is available for you will depend on your particular lender and the details of your specific situation. There are also government loan modification programs that could be an option for you depending on if you qualify and what your needs are.
Forbearance
With a mortgage forbearance, a lender will temporarily suspend or reduce your mortgage payments. This is can be referred to as a deferment period. Depending on your lender and your situation, you could not have to pay principal or interest for up to twelve months.
This can give you temporary relief, but it’s important to be aware that lenders will typically expect to be paid the amount owed in full once the forbearance period is over. Repaying the amount owed from a forbearance can be done in lump sum payments or in installments. This is different from other mortgage modification options, where the payments are usually added to the end of the loan after the loan matures or when the property is sold.
Rate Reduction
A rate reduction will reduce the interest rate of your loan. Your interest rate can be reduced for a short term or for the entire life of your loan. Having the interest rates applied to your monthly mortgage payments will lower your payments.
Loan Extension
Being granted a loan extension means that the length of your loan will be increased. If the term of your loan is increased you will have more mortgage payments over the life of your loan. With more total payments, your monthly payments will be for smaller amounts. It’s important to be aware that because a loan extension increases the length of time you are making mortgage payments, you will end up paying more interest over the life of your loan.
Principal Deferral
This is a type of mortgage loan modification that involves reducing the amount of principal that is paid off with each payment. With this type of modification your loan is modified to make your monthly payments lower.
The deferred principal amount is due when the property is sold or refinanced or when the loan matures. This is means that you should have time with lower mortgage payments so that you can save enough money to pay off the deferred principal amount.
Repayment Plan
Some lenders offer repayment plans as a mortgage modification option. With this type of modification, you would create a plan with your lender for a schedule to make up for delinquent payments. These plans can vary from person to person, but the goal is to bring the homeowner current on all payments and fees.
They typically involve some sort of lump sum payment at the beginning of the repayment plan that’s a percentage of the delinquency amount. After the initial payment, monthly payments may be increased until the debt is paid off.
Contact a Foreclosure Attorney Today
There are a lot of different options available for modifying mortgages. You can work with your lender to make your mortgage payments more manageable for you. It’s common for lenders to want to work with homeowners that they will be able to make their payments because it helps them avoid the legal cost and time associated with foreclosure.
If you’re considering working with your mortgage company to modify your mortgage, it’s recommended that you consult an experienced foreclosure attorney. An attorney can help you make sure you’ve explored all available options and make sure that your rights and interests are protected during the modification process.
Joshua Denbeaux is an experienced New Jersey foreclosure attorney who has worked with homeowners throughout all aspects of mortgage modification and the foreclosure process. If you’re struggling to make your mortgage payments and are searching for a way to stay in your home, contact us today to learn more about how our team of lawyers may be able to help you modify your mortgage.
