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What Are My Options For A Mortgage Modification?

mortgage modification

Are you struggling to make your mortgage payments? Perhaps financial hardship is putting you in a challenging position? Mortgage modifications allow for a little bit of breathing room by changing the original terms of a mortgage loan.

A mortgage modification differs from refinancing, which pays off a current mortgage and replaces it with a new one. If you’re wondering how to renegotiate a mortgage in Florida, then stay with us as we explore the various options for a mortgage modification.

What Is a Mortgage Modification?

When facing foreclosure or long-term financial hardship, then a mortgage modification can be a saving grace.

The process of a mortgage modification involves making changes to an existing mortgage agreement so that it’s easier for homeowners to keep up with payments. These changes typically include a new interest rate or a revised repayment schedule.

Who Is Eligible for Mortgage Modifications?

No One is entitled to a mortgage modification. Whether or not a mortgage can be modified, is between the Lender and borrower. There are various factors that influence a mortgage modification, such as the payment amount, the length of the loan, and the interest rate. The following factors are considered when applying for a mortgage modification.

  • Eligibility to refinance
  • Facing a long-term financial hardship
  • Falling several months behind on your mortgage payments
  • Illness or disability
  • Divorce or separation

Benefits of Mortgage Modifications

There are a few downsides to a mortgage modification, such as taking longer to pay off your debt or paying more interest over time. However, the process also may offer many benefits. It is all a matter of negotiation and tactic that can be employed by a knowledgeable, experienced real estate attorney.

  • Resolve delinquency status with a mortgage company
  • Reduce monthly payments to a manageable amount
  • Permanently change the terms of the original mortgage
  • Less impact on your credit score when compared to a foreclosure
  • Opportunity to remain in your home

Options for Mortgage Modifications

There are different types of mortgage modifications that are determined by the original mortgage agreement. Below are a few of the options for mortgage modifications, which can also be combined.

Modify the Type of Loan

One of the most common ways to modify a loan includes changing the type of loan. For example, change from an adjustable-rate mortgage, which has a variable interest rate that changes periodically, to a fixed-rate mortgage that charges a set, regular interest rate.

Extending the Term of the Mortgage

Lengthening the term of the mortgage is another way to alleviate the stress of making tight financial payments. For example, a 20-year loan term can be extended to 30 years, in turn decreasing the monthly payments.

Reducing the Interest Rate

There may be the option to lower the interest rate of the loan, thereby lowering the total monthly payments.

Adding Past-Due Amounts to Principal Balance

Another way to modify a mortgage payment is to add any past due amounts to the unpaid principal balance. Adding these amounts, such as interest and escrow, helps to re-amortize the loan over the new terms.

Explore Loan Modification Programs

There are various loan modification programs that can help homeowners make payments. Some examples include;

  • Conventional loan modification
  • FHA loan modification
  • VA loan modification
  • USDA loan modification

Top Tips for Getting a Mortgage Modification

At the start of the pandemic, nearly 14% of all mortgage borrowers enrolled in forbearance programs. If you are also considering a mortgage modification, then you should consider the following tips.

  • Gather all of your financial information in advance
  • Be prepared to explain your current situation and financial hardship
  • Compare your option of mortgage modification compared to refinance and forbearance
  • Prepare a list of questions to ask a loan modification attorney

Expert Advice from a Loan Modification Attorney in Florida

A loan modification can be an effective solution for borrowers facing long-term financial difficulty. While assessing your options, an expert mortgage modification attorney can be a large advantage. At Gary I. Handin, PA, we have years of experience handling loan modifications and the various options available. Contact us for a consultation at 954-796-9600.

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Law Offices of
Gary I. Handin, P.A.

Providing professional legal services for the city of Coral Springs. Contact us today for a free consultation – 954-796-9600.

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