A loan modification is basically a change to your current loan agreement that will make your payments more affordable. This will prevent you from going into default and keep the banks and the lenders happy. You see, in most cases, the bank would rather do a loan modification then take the chance of you filing bankruptcy or them having to go through another foreclosure proceeding.
So what do you need to do in order to get a loan modification? Well the first step is to simply ask. As the good book says, you have not because you ask not. Just call up your bank and let them know you are having some financial difficulties. Be honest and let them know you are not able to make your payments right now. Each bank has a different set of requirements so the only way you will know if you qualify is to call and ask.
When you are going through the process, it is very important that you seek out loan modification assistance. There are many options you have when it comes to a loan modification and you want to make sure you are going with the option that is best for your particular situation.
Here are the 5 options that you have:
- You can refinance the loan
- The bank might allow you to skip a few payments and have them added to the end of your loan
- The bank could forgive the principal you owe on the loan which would reduce the total amount of the loan.
- You interest rate could be reduced
- The term of the loan could be extended
To see how these changes will affect your monthly payment you can always go online and use a loan amortization calculator.