(DailyChive.com) – Your home is likely one of your biggest investments. Making on-time payments on your mortgage is imperative for keeping your family housed, as well as protecting this investment and your financial health. What happens when you are struggling to pay bills? What mortgage relief options are available for homeowners? Finding the right mortgage relief options for your situation can mean the difference in keeping your home or losing it, so it is important to understand what options are available to you and if you qualify for relief.
Refinance Your Mortgage
One common mortgage relief option is refinancing a mortgage. Essentially, you are trading in your existing mortgage for a new mortgage. The new loan is used to pay off the first mortgage. With a new principal balance and a different interest rate, you are likely to have a different monthly payment. Depending on the equity in your home and the terms of the loan, you may end up with a better interest rate, lower monthly payment, or both. There are fees associated with refinancing a mortgage, but it can still be the right option for individuals who can secure better terms and lower payments for long-term financial relief.
Loan Modification
A loan modification is a process where you change the terms of an existing loan with your lender. Depending on your specific requests and what your lender agrees to, you could potentially accomplish any of the following:
- decrease part of your loan
- lowering your interest rate
- changing your loan from adjustable-rate to a fixed-rate loan
The goal is for the outcome of the loan modification to give you a more affordable monthly payment, though there is a chance you will extend the length of the loan. However, this may be an option for homeowners facing foreclosure because lenders may want to avoid the lengthy, costly process.
Request Loan Forbearance
Another option for borrowers is to request a loan forbearance for their mortgage. This means you will reduce or suspend your current mortgage payments for a specific amount of time. Loan forbearance can allow you to divert money to other essential needs during a period of financial struggle. Asking for loan forbearance as soon as possible is imperative. The fewer missed payments, the easier it may be to implement this option.
Federal Housing Administration Streamline Refinance
For homeowners with federally backed mortgages, there may be other options. For current Federal Housing Administration (FHA) borrowers, the Federal Housing Administration Streamline Refinance helps facilitate a more affordable mortgage. The FHA is a division of the Department of Housing and Urban Development (HUD), which has many programs and resources for housing relief and assistance for individuals and families that struggle. Homeowners may be eligible for the Federal Housing Administration Streamline Refinance if they have made a minimum of three consistent on-time payments on their current FHA mortgage. Even homeowners who are in forbearance may be eligible for this assistance, so it is an option that may help avoid financial devastation.
How to Find Mortgage Relief Programs
Mortgage relief programs can provide homeowners with lower interest rates or lower monthly payments, and help them avoid foreclosure and the loss of their home. There are multiple mortgage relief options for which a homeowner may qualify, so the first step in finding mortgage relief programs is to contact your lender. Discussing the various mortgage relief programs that are available to traditional borrowers and those with government-backed loans will help you determine which programs are most appropriate for your needs and help you determine if you qualify.
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