Advantages of mortgage modification that make it worthwhile
When you can not manage to make payments toward your mortgage loan and your lender agrees to a change in the terms of your mortgage loan, then that modification or change is called mortgage modification. This modification could be a reduction in the rate of interest or an increase in the repayment term of the loan or both. The rates are adjusted or modified as per your affordability, so that you will need to pay towards your mortgage as much as you can afford.
Some of the advantages ok mortgage modification are as follows.
1. Low interest rates: One of the main advantages of mortgage modification is the reduction in interest rates. The exact rate as per which your loan will be reduced depends entirely on the agreement that you have with your lender. However, usually 3% to 7% is decreased on your original interest rate. This leads to reduction in the amount that you need to pay towards your loan, every month.
2. Extension in the loan term: Mortgage modification leads to an increase in the repayment period of the loan. You should understand that you will need to pay for a longer duration of time but lower than what you originally needed to pay. This makes it more affordable and comfortable for you to make payments.
3. Preserves home ownership: A very strong reason for which you would opt for mortgage modification is that it preserves home ownership. If you are not able to make your mortgage payments, then you stand the risk of your home being foreclosed. However, if you opt for a mortgage modification your mortgage payment rates are adjusted as per your affordability. Thus, you are able to make payments every month and can stay in your house without the fear of a foreclosure. A foreclosure also affects your credit report very adversely and stays on it for almost 7 years. So, it must be avoided in any circumstance.
4. Banks willing to help: Most banks will be willing to help you out in order to reduce those monthly payments. This happens more so if you have a solid payment history. It is a beneficial situation for both the bank and for you. This is because you get to stay in your house and the bank also earns something on the property. If your home was foreclosed, then the bank would have to let your property just sit uselessly and earn nothing on it.
These are a few advantages of mortgage modification for which you should consider this option and rescue yourself from foreclosure.