I am behind on my mortgage payments. Should I modify my loan? - Reid Real Estate Group
January 21, 2020

I am behind on my mortgage payments. Should I modify my loan?

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If you've fallen behind on your mortgage payments, your lender may be offering you the chance apply for a loan modification. In a loan modification the lender makes permanent changes to the terms of your mortgage resulting in a more affordable payment. Keep  in mind that while a mortgage modification will reduce your payment, it will not reduce the amount you owe on the property.

IN FACT, IN ALMOST EVERY SINGLE INSTANCE, A LOAN MODIFICATION WILL INCREASE THE BALANCE OF YOUR MORTGAGE.

This is the main reason most loan modifications ultimately fail, and you should carefully consider the consequences of taking one. Read on to see if a loan modification could be a solution for you:

stop foreclosure

IS A LOAN MODIFICATION RIGHT FOR YOU?

A loan modification may be a good choice if:

  • The situation that caused you to fall behind has been resolved. 
  • You have a stable financial situation (including steady employment) to support the new payment amount indefinitely.
  • You do not have significant negative equity in the home, or;
  • Are prepared stay in the home for many years to overcome a heavy negative equity situation.

A loan modification may not be a good choice if:

  • The situation that caused the default has not been resolved.
  • Your ability to continue making timely payments long term is not secure.
  • You are unsure whether you wish to to stay in the home for the long term.
  • You would prefer to sell the home and move on.

Going Forward:

While a loan modification may be a choice for some, If you have negative equity in the home and see yourself needing or wanting to move within a few years time, a loan modification is not likely to be a good solution for you. A failed loan modification or a forced or desired move in the near future will ultimately lead you right back around to the same choices you face today: Foreclosuredeed in lieu, or a short sale. We can help you navigate your options.

Minna Reid

Minna Reid is The Broker - Owner of Reid Real Estate Group. Reid Real Estate Group is a full-service Connecticut residential real estate brokerage, specializing in helping homeowners with legal and financial challenges including short sales, probate sales and tax lien complications.

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