Fixed Rate Mortgage: How To Get Out Of It
Are you worried about your fixed rate mortgage and how to get out of it? Your boss has slashed your annual pay. You lost your high-paying job and are now working for half the money. Whatever the reason, that mortgage loan you took out three years ago doesn't seem so affordable now. You're struggling to make your monthly mortgage payments. Fortunately, there is a way to get out of that fixed-rate mortgage: You can ask your mortgage lender or bank for a loan modification. Doing this requires you to follow some simple steps.
- Make copies of the financial paperwork that proves you have suffered a financial setback. You'll send these copies to your lender to show that while your gross monthly income has fallen, your monthly debt obligations have not. Documents that you should copy include your last two paychecks, your most recent bank savings and checking account statements, your most recent federal income tax return, your current credit-card bills and your most recent auto, student or other loan statements.
- Write a financial hardship letter. This letter should explain clearly why you are struggling to pay your mortgage bill and why you need to get out of your fixed-rate mortgage. If you've taken a lower-paying job, include this. If your boss has eliminated overtime, mention this. You'll eventually send this letter to your lender.
- Call your mortgage lender or bank and explain that you have suffered a financial setback that makes it impossible to pay your monthly mortgage bill. Tell your lender what this setback is and request a loan modification that will get you out of your current fixed-rate mortgage and result in a lower monthly payment.
- Send your lender your hardship letter and the copies of your important financial documents. Your lender will review these to determine that you truly have suffered a financial setback that would prevent you from paying your monthly mortgage.
- Accept your lenders' modification offer if your lender or bank approves your request. Your lender might offer to lower the principal balance on your fixed-rate mortgage loan. It might reduce your interest rate or it might restructure your loan terms so that you have a longer time to pay off your loan and a lower monthly payment. Only accept this offer, though, if the resulting mortgage payment is one that you can afford.