Life can be tough especially when it comes to finances. Uncertainty can affect the most creditworthy person. You lose your job, terminal illness, divorce, the list can go on and on. It happens to a lot of people. Nobody wants to default on their home loan on purpose and lenders understand that. They know there must be a reason you’re struggling, and most want to help. There is help!

What are your options?

Refinancing & Modifications

Refinancing aka Refi

If you have enough equity in your property and a qualifying credit score, this could be a possible solution. Basically, you’re getting a new loan with a lower interest rate if available and a longer term that will lower your monthly payment and the risk of default or foreclosure.

Loan Modification aka Loan Mod

A Loan Mod is a permanent change in one or more of the terms of a borrower’s loan. It basically a brand spanking new loan that fits your financial needs.

Loan terms that may be changed

• Reduce the interest rate
• Change from an adjustable rate to a fixed rate
• Reduce the principal amount
• Reduce or waive late fees or other penalties
• Lengthen the loan term

Lenders use specific financial analysis criteria when determining which modification to offer you. Basically, they want to give you a loan you can afford and start fresh.

If you want to modify, there are several things you have to do and one of them is writing a hardship letter and show proof that you have fallen in hardship and need the help. This could be like you lost your job, got ill, disabled, etc. A true hardship, and no, racking up credit card bills on clothes does not count as a hardship…unfortunately.