Tips to Negotiating With a Mortgage Lender to Avoid Losing Your Home
Negotiating with Your Lender
Whether you are falling behind on your mortgage loan payments due to a job loss or pay reduction, or you have one of the many adjustable rate mortgages that you didn't realize would skyrocket to such a high interest rate in such a short amount of time, odds are you are concerned about the chance of possibly losing your home. With the list of home foreclosures steadily increasing, and the value of homes rapidly decreasing, many homeowners are finding themselves stuck with a home mortgage loan for much more than their home is truly worth. While many homeowners have taken on extra jobs, or drastically cut back their budget in an effort to have enough money to cover their mortgage loan payment, many are in serious risk of losing their homes to foreclosure no matter what they do.
While home loans that were classified as delinquent used to quickly be turned over to the lenders collection company in an effort to make as much money off the cash strapped consumer before the home went into foreclosure, many mortgage lenders are now giving homeowner the chance to re-negotiate the terms of their home loan that will allow the borrower to get back on track with their loan payments. Many are now willing to listen to realistic requests for principal reductions, or rate freezes, if backed up with legitimate proof as to why the new terms will best help the borrower's financial situation. Here are some simple tips that can help you negotiate the terms of your current mortgage with your lender so you can keep your home while obtaining a payment you can comfortably afford.
First, you will want to learn what house loan terms will work best for you and create the proper way to ask for it. Whether your home is no longer worth the value of the mortgage loan you have on it, or your family has taken a serious hit to the pocketbook because of a job loss or pay decrease, you will need to determine what change you want your lenders to make to your mortgage so you can easily afford it again. Whenever you have to negotiate with your mortgage lender and money is involved, it is always best to come to the negotiations with proof as to why you cannot afford the current terms and how you will be able to successfully afford the new terms. If your mortgage loan is at risk of going into default, banks are willing to hear any potential plan you have in mind that will keep money funneling into their wallet. If you have noticed that the number of foreclosure rates in your area is steadily increasing, you may want to use that as a form of bargaining chip with your mortgage lender. If you tell them that accepting your terms will prevent them from having to take on yet another foreclosure home in your neighborhood, they may be much more likely to work with you than against you when it comes to modifying the terms of your loan.
Second, you will want to create a detailed analysis of your current budget and include a detailed income and expense stream. Now that you have told your lender why you cannot afford your mortgage and what changes need to be made in order to help you stay current with your mortgage payments, you will then need to provide them with a detailed analysis of your income as well as your expenses. It can be something as simple as an excel spreadsheet with a column of debits and credits showing that you currently have more money going out than the income you have coming in can cover. You may also want to create a second sheet complete with the new payment terms and how it will positively affect your budget. Since lenders work by the numbers, they will be more apt to consider your new terms if they can see in black and white how the new terms will help you continually pay them each and every month. Just make sure that your budget is free of any luxury expenses like club memberships, maid service or any other expense that can be lived without when cash becomes tight. If your budget shows that you are surviving on the bare minimum, you have a better chance of your mortgage lender taking your request seriously which increases the chance that they will work with you to create payment terms that will best fit your needs.
Lastly, stay on top of your request, and expect at least one counter offer from your mortgage lender. Don't assume that your home loan broker will bend over backwards to meet your every request just because you submitted a request for a terms adjustment to your mortgage loan. If you want to see your needs met you will need to be a pain in your lenders derriere. If you have to, send your loan modification request via certified mail so you are sure of when they receive your paperwork. Give them a few days to maybe a week to review it, and follow-up with your home loan lender to find out if they have made a decision on your request. If you stay on top of your request, you increase the chance that you will get what you want sooner rather than later, because as the saying always goes the squeaky wheel gets the oil. If you stay on your lenders radar, they are more likely to give you the oil, i.e. the modification, you have requested in an attempt to get you to leave them alone. There is also a chance they will answer your requests with a counter offer. If this does happen, take their new terms and apply it to your budget. If the numbers still don't work for you, counter back until you and your mortgage lender can agree to terms that will best meet both your needs.
These are just a few of the simple tips that can help you negotiate a terms modification to your mortgage loan so you can avoid losing your home. Make sure to take the time to perform a detailed analysis of what terms will best meet your budget, and don't be afraid to be the "squeaky wheel" to your lender. Giving them realistic proof as well as staying on top of your request increases your chances of having your terms request approved, so you can comfortably afford the payments that will allow you to keep your home for many years to come.