A mortgage modification is a change made to the terms of a mortgage loan by the lender, typically aimed at helping the borrower to avoid foreclosure and stay in their home. The modification may involve a reduction in the interest rate, a change in the loan’s term, or a forgiveness of a portion of the outstanding principal balance.
The goal of a mortgage modification is to make the monthly payments more affordable for the borrower and to help them avoid defaulting on their loan. The process typically involves submitting an application and providing documentation to the lender, who will review the borrower’s financial situation and determine whether a modification is feasible.
Our goal is to encourage lenders to modify the mortgages of homeowners who can no longer afford their monthly house payments because of hardship. The definition of hardship includes lost income, increased expenses and other indications of being at risk of default.
There are some qualifications to be eligible for a loan modification, and it’s not an easy process but if the borrower qualifies, then the mortgage provider figures out what it will take to decrease the monthly payments to 31 percent of pretax income.
Loan modifications are not always permanent however and most borrowers would see their payments rise again after five years but it could be just what you need to save you from possible foreclosure.
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