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What Do You Need to Know About Mortgage Modification?

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Any changes made to the mortgaged property after the mortgage period has started, it's known as a mortgage modification. 


The alterations made to the terms and conditions agreed at the time of signing of the mortgage-related documents is done outside of the lieu between the lender and the borrower. 


Reasons to go for a mortgage modification 


Mortgage modification is done on several occasions and for several important reasons. Some of the most common reasons as to when mortgage modification is done are provided below. 


• Defaulting of loan repayment 


When the loan borrowed on the mortgaged property is due and the borrower is unable to repay, then the mortgaged property can be sold outside of the terms and conditions agreed. However, the unpaid amount has to be given to the lender after selling off the property.


• Property being sold


If the property is sold well before the mortgage repayment period, then you can go for pledging another property for the same mortgage loan you had availed as a mortgage modification plan. 


What are the essential documents required for obtaining mortgage modification? 


To obtain a mortgage modification, it is necessary to prove to the moneylender that you are undergoing a financial crisis due to some setback in your life. This could be done by attaching some documents like the ones listed below along with the application for a mortgage modification. 


• Income certificate or salary slip of your current organization 

• Divorce or separation certificate 

• Any health issues related certificate from a doctor


How to go for a mortgage modification? 


These are some of the ways by which you can go in for a mortgage modification. These are suggested by various mortgage assist agencies as well. 


• Reduce the interest rates


For instance, if you had been getting interest rates, like 3% to 4% on the property you had leased on a mortgage agreement, if you reduce it to about 2%, then the repayment of the loan would significantly reduce. 


• Increase the loan repayment period 


If you had earlier agreed to a repayment period for about five to six years, now you need to increase the repayment period to about 8 to 10 years which in turn splits the loan repayment amount into intervals of longer duration but the final amount to be paid would remain the same. However, this is done only when you provide a proper income certificate and proper validation to the lender based on your credit rating and another financial capacity. 


• Altering the principal 


There might be certain situations where a pandemic might strike the financial sector or there could be a major economic recession. In such cases, when the principal of the loan amount is altered, then your mortgage could be modified to a greater extent. Adding the other fees into the total principal amount if in case you have other kinds of fees that need to be paid to the lender, then it can be added to the principal loan amount which in turn gives the user a lengthy period to repay the loan. 


Apart from all of the other ideas, methods, and suggestions given above it is always better to go for the mortgage loans recognized by any proper governmental agencies. There are a lot of instances where the private institutions might not go in terms with the rules and regulations laid down by the government for altering and providing concession to the mortgage loans. 


When it comes owns property or land. It is a safer bet to have the government play a role in it.