Mortgage modification

Mortgage modification: A change in a homeowner’s mortgage loan contract terms.

Mortgage modification: A process where the terms of a mortgage loan are modified outside the original terms of the mortgage loan contract agreed to by the bank and the homeowner.

Mortgage Modification: Restructuring a Loan Contract

A mortgage loan modification, a restructuring of the mortgage contract in which one or more of the terms are modified to afford a more affordable repayment plan, usually involves a reduction of the interest rate, an extension of the length of the term of the loan, or a conversion from a variable interest rate to a fixed interest rate.

According to New York attorney Georgette Miller, “There are several factors considered when determining whether a mortgage modification will work for you. You need to consider what the value of your home is now and what it will be worth one year from now. Also remember that foreclosure can bring significant legal fees and, if you must relocate, there will be costs involved in a move, such as utilities and security deposits. You also need to consider what price the home will sell for in a foreclosure sale and whether you are actually at risk of defaulting on your mortgage loan.”

In order to qualify for a mortgage modification, a homeowner must show that they cannot make their current mortgage payment due to a financial hardship, complete a trial period in order to establish they can afford the new monthly amount, and submit all requisite documentation to the bank for evaluation.

The Consumer Financial Protection Bureau says, “Modifications may involve extending the number of years you have to repay the loan, reducing your interest rate, and/or forbearing or reducing your principal balance.

“If you are offered a loan modification, be sure you know how it will change your monthly payments and the total amount that you will owe in the short-term and the long-term. Carefully consider what kind of modification best addresses your needs. If you receive a loan modification and you still can’t make the payments, you may lose your home.”

Mortgage modification

Mortgage modification: A change in a homeowner’s mortgage loan contract terms.

Mortgage modification: A process where the terms of a mortgage loan are modified outside the original terms of the mortgage loan contract agreed to by the bank and the homeowner.

Mortgage Modification: Restructuring a Loan Contract

A mortgage loan modification, a restructuring of the mortgage contract in which one or more of the terms are modified to afford a more affordable repayment plan, usually involves a reduction of the interest rate, an extension of the length of the term of the loan, or a conversion from a variable interest rate to a fixed interest rate.

According to New York attorney Georgette Miller, “There are several factors considered when determining whether a mortgage modification will work for you. You need to consider what the value of your home is now and what it will be worth one year from now. Also remember that foreclosure can bring significant legal fees and, if you must relocate, there will be costs involved in a move, such as utilities and security deposits. You also need to consider what price the home will sell for in a foreclosure sale and whether you are actually at risk of defaulting on your mortgage loan.”

In order to qualify for a mortgage modification, a homeowner must show that they cannot make their current mortgage payment due to a financial hardship, complete a trial period in order to establish they can afford the new monthly amount, and submit all requisite documentation to the bank for evaluation.

The Consumer Financial Protection Bureau says, “Modifications may involve extending the number of years you have to repay the loan, reducing your interest rate, and/or forbearing or reducing your principal balance.

“If you are offered a loan modification, be sure you know how it will change your monthly payments and the total amount that you will owe in the short-term and the long-term. Carefully consider what kind of modification best addresses your needs. If you receive a loan modification and you still can’t make the payments, you may lose your home.”

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