There are lots of reasons to renegotiate a mortgage. Perhaps you cannot afford your mortgage, and you are at risk of falling behind in your payments, or you are already several payments late. Alternatively, you might be able to afford your mortgage but want to take advantage of reduced fixed rates of interest. Whatever your reasons, it’s important to have a set strategy and know what to expect from the creditor when you renegotiate your mortgage. Federal and California organizations can help you with discussions, often at no cost.
Contact a Housing and Urban Development (HUD)-approved housing counseling agency. These agencies offer free (or cheap ) advice. They will let you know about authorities mortgage aid programs you can apply for and allow you to negotiate with your creditor. Visit HUD’s site (see Resources) for an up-to-date list of approved agencies in California.
Prepare for your dialog with your lender. Gather relevant paperwork including your account information, income statements and also an up-to-date budget for the loved ones. Read and familiariaze yourself. Prepare to explain and prove why you have to renegotiate your mortgage. If you can afford your mortgage but you are seeking a better bargain, be prepared to quote the reduced interest rates other lenders are providing.
Call your creditor as soon as possible. Never dismiss calls or letters from the lender. It’s ideal to call your creditor before you fall behind on your mortgage obligations. Ask for your lender’s loss mitigation department.
Provide the paperwork your creditor asks for. If your creditor agrees to renegotiate your mortgage, you’ll have to provide extra paperwork. This may include filling in and signing types, as well as providing details on your fiscal condition.
Review the newest mortgage terms carefully, preferably along with your home counselor. Confirm that the terms in the documentation your creditor sends is exactly what you agreed to over the phone. Sign them and ship them straight back to your creditor.