Loan modifications aren’t for everyone, but they’re really good to know about if you’re ever in a hard financial situation.
If you’re in a position where you’re struggling to pay off your mortgage, your lender would likely rather work with you to modify your loan than go through a foreclosure.
A loan modification will modify an aspect of your current mortgage, which could be changing the interest rates, changing the loan term, or switching the loan type, all with the goal of making your monthly payment more affordable for your situation.
Loan modifications can take several months to finalize, so if you’re in a tough spot, you’ll have to hold out and pay the mortgage until the modification is complete. You also might end up paying more in interest over the life of your mortgage, especially if the term of the loan is lengthened.
If you’re not experiencing financial hardship, but want to change something about your loan, you can ask your lender about refinancing your loan.
