With the fears of recession still looming large over the country and with no signs of a decrease in the joblessness rate, an increasing number of people are finding it very difficult to meet the monthly mortgage payments. Unfortunately after a few missed payments foreclosure turns into a real possibility. However homeowners who are dealing with such a situation need to know that there is an option that can prevent foreclosures and it is called home loan modification.
Quite simply you are asking the bank to modify the terms of your loan and this is known as mortgage modification. You can reduce your monthly mortgage outgoing through home loan modification by either requesting a decrease in the interest rate or an extension on the loan term.
With the exponential increase in the number of foreclosures in the last two years, lending institutions and the government are keen to overturn this subprime crisis and mortgage modification is being offered as a remedy to prevent foreclosure. The main aim of home loan modification is to help you to retain your home and to make sure that you can afford to make the monthly payments.
How ever before you can avail the benefits of home loan modification you will need to put in quite a bit of paperwork, the first step to securing a mortgage modification is to get a hardship letter ready. This letter will tell the lending institution about your current financial situation and the factors that led up to it. These factors can include a host of reasons like unemployment, job related accidents, death in the family or divorce or separation.
You will also mention the steps that you are taking to tackle the situation in the hardship letter for home loan modification. Finally you will try to convince the bank that you are a responsible person who has the intention to pay the loan back and that with the steps that you are taking to deal with the financial crisis you will be able to make the new payments after you secure the mortgage modification.