If you are like many Americans struggling to make your monthly mortgage payment, you are not alone. The good news is that banks are more likely now to work with you than ever before. That’s why it’s so important to know how to renegotiate mortgage and how to renegotiate mortgage rates.
Over the past decade, banks have had to foreclose on many homeowners. Therefore, it is in their best interest to negotiate with you then have another foreclosure where they will likely lose money. Banks want to get paid, and the best way to get their money is to work with you, the borrower.
Before You Begin
If you would like to renegotiate your mortgage, several documents are required to prove that you have difficulty making payments. You’ll want to round up your credit card statements, loan statements, unemployment information (if applicable) or your last paycheck stub, your previous two years’ tax returns, and your checking and saving information as well as possibly other investments you have.
Renegotiate Mortgage: Two Main Methods
There are two main ways you can renegotiate your mortgage. Which strategy you chose is dependent on several variables.
1. Work with the lender. Call the lender and honestly tell them you are currently having difficulty making your monthly mortgage payment. You will also need to tell them why you are having trouble. For example, you must inform the lender of job loss, an injury or illness or another burdensome reason.
Ideally, the best time to work with the lender is before you fall behind on your payments. This ideology was not traditionally the case, but times have changed, and the lender wants to hear from you and work with you as soon as possible.
2. Consider refinancing. If you have more than 10% equity in your home and a credit score of 720 or higher, you may be the right candidate for a refinance. Refinancing can lock you into a lower interest rate and give you a lower monthly payment that you will be able to afford.
While you may initially work with your lender on a refinance, that is not your only option. You can contact a mortgage broker who can help you find the best offers, or you can look around yourself and compare rates. If you belong to a credit union, don’t forget that credit unions often offer lower prices than banks do.
Also, consider changing the terms of your loan. If you have a fixed rate mortgage, a five-year adjustable rate mortgage may give you some breathing room with a lower interest rate and lower monthly payment. This alternative is especially attractive if you plan to move within five years.
If you are having trouble making your mortgage payment, don’t despair. You are certainly not the only one who has been in this situation, and you will likely find your lender willing to work with you. Even if your lender isn’t, some likely other lenders will work with you and be glad to get your business. Remember, in general renegotiating your existing mortgage is more comfortable than getting a new mortgage.
Are you considering to refinance your mortgage? SuperMoney makes it easy to look for loan terms, loan amount and reputable sources. Compare your mortgage refinance options here.