If your financial situation has changed since buying your home and you are no longer able to make payments, you may want to consider a loan modification. A successful loan modification will result in changes to your interest rate and the duration of your loan, making the payments more affordable. Not all loan modifications, however, are created equal. Here are a few tips to make sure you receive favorable terms when you modify your loan.
- Do not wait. Loan modifications used to be reserved for homeowners who have already defaulted on their loan. Now, homeowners are able to receive loans before they fall too behind on payments. Some are even able to negotiate new terms before they start missing payments.
- Research your lender. Some homeowners are not even aware of who owns their loan. Whether or not a single bank controls your loan or if your loan has been divided up will affect your ability to modify your loan. Ask your mortgage servicer directly who owns the loan.
- Provide honest and detailed information. The lender will ask specific questions about your financial situation when determining whether or not you qualify for a modified loan. Lying about your finances because you are embarrassed can hurt you chances of receiving a loan modification.
- Gather the paperwork you will need. Your lender will need your most recent income tax return, information about your savings, your account balances of your credit cards, details of your other monthly payments, income information for your household, and a letter breaking down why you need your loan modified.
- Document everything. Keep records of every phone call and every letter you receive from your lender.
- Remain patient and calm. It can take time to receive a loan modification. Many modifications take months to complete. Getting frustrated or angry with your lender will not help, but staying calm and collected could inspire your lender to be more flexible.
Last but not the least, seek professional help. An experienced Orange County real estate lawyer can help you fight to keep your home.