| Millions of people struggle every month to pay their | | | | interest modification. The goal is the same as with |
| mortgage, often on homes that are now worth less | | | | reduced principle - you want to reduce the monthly |
| than ever. It's incredibly frustrating, and if you lose a job | | | | payments. Reducing the interest by just a percentage |
| or become ill, you may not be able to continue making | | | | point or two can result in significant reduction of the |
| that hefty monthly payment. Loan modification | | | | monthly payments needed. If you're considering either |
| programs are becoming more common as more | | | | a reduced principle or reduced interest loan |
| homeowners default on properties and banks have to | | | | modification, it's a good idea to consult an experienced |
| deal with owning abandoned houses. Foreclosing on a | | | | attorney who can explain the pros and cons of each |
| house is actually a big expense; they have to maintain | | | | one. |
| the house, advertise it, and handle a sale. In order to | | | | 3. Although less common, an extension of the |
| avoid having to do all of this extra work, banks and | | | | payment terms is another way to reduce your |
| lending institutions are increasingly offering loan | | | | monthly payments. It's important to keep in mind that |
| modifications programs. | | | | you won't be paying any less money for your home; |
| A mortgage loan modification plan is simply a | | | | you're simply spreading the payments out over a |
| restructuring of your original loan in some way that will | | | | longer period of time. You might extend your 20 year |
| reduce either what you owe on your home or reduce | | | | mortgage to a 30 year mortgage, giving you extra |
| the amount of your monthly payments to make it | | | | money each month because your payments have |
| easier for you to pay each month. There are generally | | | | been significantly reduced. Keep in mind, however, that |
| three ways a loan can be modified. These are often | | | | you'll be paying for your home for years longer. |
| referred to as "Foreclosure Defense Mortgage | | | | Balance your current financial situation against the |
| Modification" because they are put into place in hopes | | | | possibility that you may be retired and still paying on an |
| of preventing a foreclosure: | | | | extended mortgage and decide if it works for you. |
| 1. Reduced principle loan modifications reduce the | | | | There is no template for loan modifications; each home |
| actual price of the home. If you still owe $60,000 on a | | | | owner can negotiate a reduced payment of some |
| mortgage, your attorney could negotiate with the | | | | kind if they are having trouble meeting their obligations. |
| lender to reduce the principle so that you will only be | | | | An attorney who is experienced in negotiating |
| responsible for paying back $30,000. With much less | | | | modifications can point out questions that might not |
| money owed over the same time period, you can | | | | have occurred to you and suggest the best possible |
| significantly reduce your budgeted monthly payment. | | | | mortgage loan modification program for your situation. |
| 2. A similar mortgage modification is the reduced | | | | |