You may be surprised to realize that you can work with your lender to modify your home loan on your own. You do not need to pay a service to do this, but you may need determination and a bit of base knowledge. This information is most relevant for individuals managing adjustable rate mortgages that may have adjusted to a higher rate or may be about to adjust upwards. You may also try this strategy if your financial situation has changed and you are having difficulty or forsee difficulty managing your loan payments. Loan modifications can include lower interest rates, a longer loan term and a fixed rate. You may still qualify for loan modifications if you are late with your house payments, but it is often ideal to begin this process while your loan is still current or near current.
Start with a phone call to your lender. Be prepared to make a number of phone calls and to have to work your way through the tiers until you find someone who is actually capable of helping you qualify. Ask for the loss mitigation department. Customer service has no power or ability to modify your loan. If you can, get the direct phone number for loss mitigation and note down the full name of anyone you speak to. This will help with both your record keeping and make your time on the phone more productive.
Keeping clear records is critical during this process. Document all calls made on paper or in a simple spreadsheet including the time, date, who you spoke to, number called and information discussed. Keep all correspondence from your lender and all financial paperwork in order, including proof of income. Dates, times and names are all critical in this process, particularly if you believe that you will qualify and the lender is less cooperative.
You should expect a number of questions about your financial situation. Be honest about your financial difficulties, but avoid indicating that you believe foreclosure is inevitable. Lenders will not work with homeowners who have no ability to repay their loans, even with modification. In order to qualify for a loan modification, you have to be truly unable to meet the current terms of your home loan. If they believe that you qualify, you will receive a loan modification packet asking for further information, calculating your monthly expenses and verifying your financial information.
Read through any loan modification agreements carefully, assessing them in relation to your actual budget. While a loan modification may lead you to spend more on the total cost of the loan, it can allow you to save your home and the equity in it while preserving your credit. Be certain to keep to the payment terms of the modification if your lender agrees to it.