What is a home loan modification?
A loan modification is an adjustment to the terms of your existing mortgage note. You might be a candidate for loan modification if you have difficulty making a mortgage payment.
Typically, your bank will require you to prove financial hardship before it pursues an adjustment. If you qualify for a loan modification, the bank might:
- Convert an adjustable-rate mortgage into a fixed-rate mortgage;
- Reduce the interest rate;
- Extend the term of the loan in order to reduce the amount of payments; or
- Allow a forbearance of past-due payments, so that you may pay them off at a later date.