Mortgage Modification Explained

A mortgage modification is a change to your loan agreement by the lien holder (bank or other financial institution). The purpose of a mortgage modification is to lower your monthly payments to make them more affordable. Banks are more receptive to mortgage modifications in light of the tremendous losses they are taking on foreclosures and short sales.

Banks are open to mortgage modifications because they are trying to limit the number of homes they foreclosing on and accepting short sales on. By approving a mortgage modification the bank and the homeowner win. This does not mean, however, that every mortgage modification request will be approved.

A mortgage modification can be a permanent change to the terms of your mortgage or a temporary change depending on many factors. When you or your mortgage modification company are negotiating the terms of the modification you will want to make sure you consider both your immediate and future economic goals and expectations.

Because the lender is the one who has to give final approval of the mortgage modification and therefore are a party to the transaction, the actual terms of the mortgage are changed. This could include a principal change, a rate change, a term change or any combination of these things.

It is important for you to understand what is being changed and the short-term and long-term impact of those changes. A new amortization schedule should be reviewed and questions asked prior to you finalizing your mortgage modification.

Many homeowners are seeking legal counsel when they are looking for a mortgage modification. They know that hiring a lawyer means someone is specifically focused on their needs. The lender's primary focus is their needs. Your primary focus is yours. It is important to make sure you fully understand the transaction before making any final decisions.

If you are struggling to pay your mortgage you should speak to someone about getting a mortgage modification.