How To Do A Loan Modification

If you are unable to make your mortgage payment due to a change in your financial situation, you may want to contact your lender to find out how to do a loan modification. Some lenders will do a loan modification for no charge, since the alternative is foreclosing on the house loan, or letting it go into delinquent status until you can bring it current. If your situation has changed permanently, and you will not be able to continue paying the mortgage on time, the lender may work with you to prevent a foreclosure.

1. Write a hardship letter explaining why you want to do a loan modification. Your lender will require a detailed explanation, in order to consider your modification request. Write down all of the specific reasons for your request, and give the letter to your lender.
2. Fill out a new loan application with your lender. Supply the lender with your most recent tax returns, and find out if they need any other information. Discuss the terms of a loan modification with the lender, and let them know what monthly payment you can make.
3. Find out if the lender can include any fees in the new loan amount. If the lender charges fees to do a loan modification, they may be willing to finance the fees instead of having you pay them in cash. If there are no fees, set up a time to close on a loan modification, and continue to make your mortgage payments until you modify the loan.
4. Review the loan modification documents at the closing. Find out when your new payment is due, and amend your budget to allow for the change. For example, if you are used to paying on the first, and the payment is now on the 15th of the month, arrange your finances to be able to make the payments on time.