What Is Loan Modification?
Loan Modification Options
There are roughly three options you can choose from when modifying a loan. One of these terms or multiple terms can be used to reach a reasonable outcome.
1. Lowering the Interest Rate: The interest rate on the home can be lowered to reflect the current market rate.
2. Lower the Principal: The principal amount on the home can be lowered as the result of negotiating with the lender. This is often times the hardest option.
3. Lengthen the Loan Life: Loan modifications also work to lengthen the repayment period and lower monthly payment. This means you will be paying more interest and a higher price for your home in the long run. It is a tradeoff for being able to have a monthly payment you can afford and still remain in your home.
Each of these options works to make a concrete and permanent fix to your problems rather than put a band aid over them. Loan modification can be completed on your own or with the help of a professional.
