If you’re struggling with mortgage payments, a loan modification could be a viable solution. This adjustment alters your mortgage terms to make payments more manageable without reducing the total amount you owe. Possible modifications may include lowering the interest rate, extending the loan term, converting to a fixed-rate mortgage, or deferring a portion of the principal.
It’s crucial to distinguish a loan modification from forbearance. While a loan modification changes the loan terms permanently to create a more affordable payment structure, forbearance is a temporary relief measure designed to help homeowners overcome short-term financial hurdles.
Homeowners should consult with their lender or a financial advisor to understand the specific types of loan modifications available for their mortgage type and to navigate the application process effectively.