How to Cut Your Mortgage Loan in Half
- 1). Gather the evidence you'll need to demonstrate that your financial setback is serious enough to warrant a reduction, by as much as half, of your mortgage. Make copies of your most recent federal income tax return, savings and checking account statements, credit card bills, other loan statements and your last two paychecks, if you are still receiving them.
- 2). Call your mortgage lender---do not rely on e-mail for this---and explain that you have recently suffered a serious financial hardship, such as a job loss, reduction in annual pay or long illness, that has made your mortgage payment unaffordable. Explain that if your principal balance isn't cut in half, you fear you'll default on your loan.
- 3). Write a letter that spells out your financial hardship and why it is preventing you from making your current mortgage payments. Also include a request for a 50 percent cut in the principal balance of your loan.
- 4). Send your lender both the hardship letter you wrote in Step 3 and the paperwork copies you made in Step 4. You'll now have to wait for your lender's decision. If your lender feels your hardship is severe enough, it may grant your request to cut your mortgage loan in half.
- 5). Agree to an alternative loan modification if your lender is willing to reduce your monthly mortgage payment but isn't willing to forgive half of your mortgage balance. It is far more likely your lender will suggest reducing your monthly interest rate, forgiving a portion---but not half---of your loan balance or restructuring the terms of your loan. All of these options will reduce your mortgage payment, but not as much as halving the principal balance.
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