Are you struggling to make your monthly mortgage payments? If you’ve started defaulting on your home loan, it is high time that you take the required steps through which you can get back on the monthly payments and avoid losing your home in an imminent foreclosure. Refinance and home loan modification are the two most common ways of avoiding a foreclosure on your home. While refinancing deals with taking out a new loan, home loan modification will mean modifying the terms and conditions of the current loan so that you can repay the loan with ease and without falling back on the other debt obligations. Here are some steps in which you can successfully modify your home loan.
- Check the total amount of loan that you still owe: Before you approach a mortgage lender for a home loan modification, you have to check the total amount of loan that you still owe the mortgage lender. You just have to deduct the total amount of loan that you’ve taken out and the equity that you’ve accumulated so that you may know the amount that is still to be repaid.
- Save enough money to be able to repay the loan: Once the mortgage lender changes the terms and conditions of the loan amount, you have to make sure that you then repay the amount so that further defaults don’t trash your credit score. Check your savings ratio before you approach the home loan lender for a home loan modification.
- Write a mortgage hardship letter: You should write a home mortgage modification letter to the mortgage lender where you’ll explain the hardship that you’re going through. The mortgage lender, before altering the terms and conditions on your home mortgage loan will first check the authenticity of the reason that is barring you from making the monthly payments. Only when the reason is valid, they’ll encourage a loan modification.
- Negotiate with the lender: Once you’re done with the mortgage hardship letter, you should ensure an effective negotiation with the home loan lender so that they can discuss things with you and work in your favor. You should not hide from the lender as this won’t help you improve your situation.
- Start making the payments: Once the mortgage lender believes you and alters the terms and conditions on the mortgage loan, you should immediately start making the monthly payments. If you default on the payments even after modifying your home loan, you can hurt your score badly and also be treated as an unworthy borrower.
Therefore, if you wish to opt for home loan modification, you should follow the steps mentioned above. Manage your finances at the same time so that you don’t miss the payments after modifying your home loan. Make sure your payments are reported to the CRAs so that this can time to time improve your credit score.