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Top 3 Tips for Getting a Loan Modification

If you can’t afford to pay your monthly mortgage bill, you have a couple of options. For one, you can choose to refinance. You can also apply for a loan modification. The former would force you to start over with a brand new loan. But the latter would allow you to make adjustments to your original loan terms so that your mortgage payments are less burdensome. If you’re interested in getting a loan modification, here are three steps you’ll need to take.

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1. Get Your Documents in Order

Before you can apply for a mortgage loan modification, you’ll need to gather certain documents, including recent bank statements, tax returns and pay stubs. Anything that proves that you’re dealing with a financial hardship can help your case and increase your chances of getting approved. For example, it might be a good idea to provide statements showing that you’re receiving public assistance or disability benefits.

2. Get Help From Uncle Sam

Top 3 Tips for Getting a Loan Modification

There are resources available for homeowners struggling to pay their mortgage bills. For instance, you can find out whether you qualify for the federal government’s Home Affordable Modification Program (HAMP) or a similar program that your bank might offer. Just make sure you apply as soon as possible. HAMP is set to expire on December 30, 2016.

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3. Explore Different Options

Top 3 Tips for Getting a Loan Modification

There’s more than one way to modify your mortgage loan. You could extend your loan term so that you have more time to pay off your mortgage or ask for an interest rate reduction. You could also ask to have part of your loan principal deferred temporarily.

Before choosing a particular type of loan modification, it’s a good idea to do the math and figure out which option is best for you. If you can show how a loan modification can benefit you, your mortgage lender might be willing to consider making changes to your loan terms.

Related Article: 3 Must-Do Moves to Prepare for a Mortgage Refinance

Final Word

If you can’t keep up with your mortgage payments, it’s best to get help before you default on your home loan. A loan modification is just one way to lower the cost of your monthly mortgage bill. Plus, it’s a good alternative to forclosing on your home or trying to persuade your lender to agree to a short sale.

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Photo credit: ©iStock.com/kate_sept2004, ©iStock.com/andresr, ©iStock.com/warrengoldswain

Alex Silady Alex is a graduate of New York University's journalism school. He has penned and edited articles, features and videos for news, politics and entertainment websites, both in the US and abroad. His specialties are archival research and the history of finance. His areas of expertise include home buying, small businesses and banking. Alex's hobbies include video games, especially RPGs, and following NHL hockey.
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