With the rapidly going down hill economy and ever lowering real estate rates, a large number of people who have mortgaged houses have become familiar with the idea of "mortgage modification". But even if you have heard the term, it does not necessarily mean that you understand all the dynamics involved in it.
In order to make the mortgage modification work for you, you first have to have a deep insight into it. Mortgage modification is a form of rescue from home foreclosures when the home owner is having trouble making the full mortgage payment on the house. A mortgage modification is commonly confused with the concept of taking another loan; it is not a refinance, but simply a modification of your mortgage terms. This is done to reduce your mortgage payments so that they become easily affordable for you.
Mortgage modification is a concept that wasn't very familiar to the masses until the recent economic recession. As more and more people find themselves at the risk of losing their homes to foreclosures, the idea of mortgage modification is gaining popularity and is giving hope to those who have nothing else to turn to. The rate at which homes foreclosures are being done in America has become alarmingly high recently, as even those home owners are going down who thought their financial situation was strong until the recession hit and affected everyone.
An ever declining economy and increasing interest rates has put many a home owners at the brink of losing their homes as they can no longer afford it. Houses being the most expensive asset that a majority of common people invest in, it is very important for them to hold on to it, and in most cases, mortgage modification is their only hope.
You qualify for mortgage modification if you fulfill the following criteria:
- You are having difficulty coming up with the funds to make your complete mortgage payment
- You have run into sudden and unexpected financial problems that have rendered you unable to make the payment
- You have missed a few mortgage payments, or fear that you are going to miss it in the coming months
- You are living in your mortgaged property
- You haven't filed for bankruptcy
- You still make and have enough to make the mortgage payments when they have been lowered
The toughest part of mortgage modification process is convincing your lending bank that you need it. It can be a tiring and overwhelming process for the user. Honesty and being proactive are the two key factors that will help your cause. When considering you for mortgage modification, following are the thing that almost all banks will take into account:
- The date when the mortgage was started
- The principal amount you still owe the bank
- Your mortgage payment in terms of a percentage of your monthly income
Once you have convinced your bank with proper financial evidence the bank can provide you mortgage payment relief in the following ways:
- The bank can temporarily lower the rate of interest they are charging you
- The bank can permanently lower the rate of interest they are charging you
- The bank can let you miss the mortgage payments for a few months, and continue later
- The bank can extend the total time period you have to return the mortgage loan as much as by 10 years, hence lowering your monthly mortgage payment
- The bank can defer some of your principal amount
Negotiating mortgage modification with your bank can become an arduous task, and you might want to hire professional help or a lawyer to help you through it.