Can you renegotiate your mortgage? It is certainly possible to do so, but whether you will be approved for a renegotiated mortgage is largely dependent on your personal circumstances. There are various reasons why you could consider renegotiating your mortgage. For example, you could be in a situation where you can no longer afford your mortgage and you are at risk of falling behind on your payments, or you may want to simply get a lower fixed rate.
Whatever your reasons for considering a mortgage renegotiation, there are several things you need to know about before you speak to your mortgage lender. Read on to find out about things like your credit score, loan modification options, refinancing, reasons for renegotiating, and how to pursue the renegotiation with your lender. You will then be in a good position to wisely consider whether you should renegotiate your mortgage or not.
Your Credit Score
Whether you are in a position to renegotiate your mortgage will partially come down to your credit score. While mortgage rates are affected by things like economic growth, the Federal Reserve’s interest rate moves, the bond market, and inflation, the mortgage rate you can personally get is largely based on how high or low your credit score is. Generally, you can get a low mortgage rate with a high credit score and vice versa. If you are looking to renegotiate your mortgage, having a healthy credit score will certainly help.
Refinancing and Mortgage Loan Modifications
The easiest way of lowering your mortgage rate is through mortgage refinance. There are various reasons why you may want to go down the refinancing route. You could wish to lower your mortgage rate, change the terms of your loan, consolidate debts, or pay for something like home improvements.
However, it is possible to lower the rate without refinancing in specific circumstances. For instance, you could change the original terms of your home loan because you are experiencing financial hardship. In which case, you can apply for a loan modification. By renegotiating, your mortgage lender may be able to adjust your loan by:
- Lowering the mortgage rate.
- Reducing the principal balance.
- Extending the loan term.
How to Renegotiate Your Mortgage
To renegotiate your mortgage, you need to speak to your mortgage lender. However, before you do so, you should take steps in preparation. Firstly, it is a good idea to contact a HUD-approved housing counseling agency to get free advice. The agency will be able to inform you about things like government mortgage aid programs you could qualify for.
The next step is to prepare for your conversation with your mortgage lender. Make sure you have all relevant paperwork, such as account information, financial statements, and your household budget. You should also familiarize yourself with the terms of your mortgage agreement and be ready to prove why you need to renegotiate your mortgage. If you are looking for a better deal, it is helpful to quote the lower rates that other lenders are offering.
If your mortgage lender agrees to renegotiate your mortgage, you will have to provide additional paperwork and provide further details of your financial condition. Once a renegotiation has been approved, make sure you carefully check the terms and conditions of the new agreement. It is best to get a professional, such as a housing counselor, to look over the new agreement.
