Your home is a source of pride and may also act as your biggest investment. When you face financial hardship, making that monthly mortgage payment may become a high hurdle to clear. Is a change to your mortgage payment a viable option?
There are a couple of avenues homeowners may want to consider for payment relief. A mortgage modification may provide you with the help you need to get your finances back under control. Discover how this or other mortgage options may provide some relief.
What is a loan modification?
When you need to give yourself breathing room, you may want to try and reduce that payment. A loan modification is one way that you may accomplish this if your mortgage company is willing to work with you. A modification allows you to change the original terms of your loan by:
- Increasing the length of your loan
- Decreasing the interest rate
- Changing your rate terms from adjustable to fixed
Doing any of these three actions may lower your monthly payments.
What does a refinance do?
Another option you may want to explore is a refinance. It is similar to a modification in that it may reduce your monthly payment, but it does extend the life of your mortgage. A refinance depends on the value of your home, so you may have to pay upfront or an appraisal, plus the closing costs will roll into the loan amount. If you can successfully refinance your mortgage, you may receive cash out to pay other bills. This hinges on the valuation of your home.
If your financial situation is too dire to qualify for these options, you may want to request a forbearance from the bank. Should this not work, you may want to consider bankruptcy, an option that may help you get out from under the debt and keep your home.
