When and How to opt for Mortgage Reduction
Those who are struggling to pay the mortgage of your home need to be aware that there are options available which can be of a great help to you. It is definitely essential to work alongside the mortgage lender to work out the payments so that you do not lose out on your home. For this, you need to convince the lender that you have faced a financial setback which is affecting your income big time. Besides this, you can also choose to follow some of the steps listed below. Find out which one of the steps is perfect your current situation in mortgage reduction.
1. Restructure of a Loan:
Homeowners can decide on changing the loan terms for the reduction required in the monthly mortgage payments. These payments on a fixed rate loan of 30 years are smaller as compared to those of the 15 year loans. You have the option of changing the mortgage from the ongoing 15 year loan to a loan of 30 years with the help of a mortgage refinance. Offering a proof of financial difficulty, you can ask the lender for a rework on the existing loan. The 30 year loan works out easier for the homeowner as the payments are spread over a longer span of time. This works out apt for the mortgage reduction factor.
2. Drop in the interest rate:
A drop in the interest rate is a confirmed ease of monthly payments. You can opt for this drop in two ways.
*Opting to refinance the mortgage loan so that you can benefit from the lower interest rates
*Proving a financial setback and asking the lender to bring down the rates. You require a copy of the current pay-check and accounts statements as a proof.
3. Forgiveness of Principal:
Asking for letting-go of a portion of the loan, the homeowner can get relief of big monthly payments. This is a difficult task as you need to prove severe financial crunch. This can be proved only by loss of job or a serious illness or injury. Lenders prefer a drop in the rate of interest or restructuring of a loan instead of the forgiveness of the principal. This is done only in extreme cases.
Besides the above mentioned tips you can also
*Research for a lender who offers better conditions and terms for a mortgage. This includes no monthly fees or lower fees, low rates of interest, option to opt for only interest with a minimal charge, offset account facility, LOC (line of credit) facility at favorable terms and no penalty charged for an early discharge.
*You can plan on consolidating all the debts into the home loan.
*Restructure the mortgage with Offset account. The balance in the account neutralizes the amount of the loan.
There are multiple ways for mortgage reduction.
Ensure you opt for only investments which are ‘good’ and do not burden you with additional debts. It is possible that you are free of the mortgage in no time and only then you can decide on the other investments which speak of ‘luxury’.