How to Restructure a Mortgage
- 1). Make copies of the financial documents that help prove that you have suffered a drop in income. This includes your most recent federal income tax return, your last month's paychecks (if you are still receiving any), your credit card bills, other loan statements, and savings and checking account statements.
- 2). Call your lender and explain to them that you have suffered a financial setback that has made it impossible for you to afford your monthly mortgage payments. Ask to restructure your loan, or modify it, so that you'll have a lower monthly payment. Tell the lender why you can no longer afford your payments: job loss, cut in hours at work, a serious medical condition that has kept you from working.
- 3). Ask your lender whether it is participating in any government programs designed to help homeowners struggling to make their loan payments. An example is the federal government's Home Affordable Modification Program, which provides financial incentives to encourage lenders and banks to modify the home loans of struggling homeowners. If your lender is participating, it might make the restructuring process simpler, although participation in a government program is not a necessity.
- 4). Write a financial hardship letter that states the reasons why you can no longer make your mortgage payments. The letter should be short, simple and to the point. Write that you can't afford a payment because of a job loss, illness or reduction in annual income. Then ask for a restructuring of your mortgage loan.
- 5). Send the copies you made in Step 1 and your financial hardship letter to your lender. Your lender will examine this evidence to decide whether you qualify for a loan modification.
- 6). Agree to a specific restructuring plan if your lender or bank approves your request. Your lender might reduce the principal balance that you owe, give you a break of several months during which you won't have to make your payments, reduce the interest rate on your loan or restructure the terms of your loan.
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