How to Restructure a Home Loan

by Don Rafner

If you're struggling to pay your monthly mortgage payment, you might find relief by persuading your mortgage lender to restructure your home loan, resulting in a lower payment that you can afford. Your lender can restructure your loan in several ways. It can reduce your interest rate, forgive a portion of your principal balance, rework its terms or defer several months of payment to the back of the loan. But for any of this to happen, you must first convince your lender that you have suffered a financial hardship that makes it impossible for you to afford your monthly payment.

Call your mortgage lender as soon as a financial hardship -- anything from a job loss to a reduction in working hours to a serious illness or injury -- makes it difficult for you to cover your monthly mortgage payment. Tell your lender that you can no longer afford your monthly mortgage payment and that you'd like to restructure your loan in a way that leaves you with a lower monthly payment.

Write and send a hardship letter to your lender that spells out exactly why you can no longer afford your current payment. If your spouse has lost her job, an illness has boosted your living expenses or if your boss has switched you to part-time status thereby, lowering your monthly income in the process, write about this. Request in your letter a lower monthly mortgage payment. Include evidence of the hardship with, such as a copy of the termination letter, recent pay stubs or medical bills.

Study any restructuring plan that your lender suggests. Make sure before agreeing to a plan that it will leave you with a mortgage payment that you can afford. Lenders are not required to restructure your loan. Your lender might refuse your request, even if you clearly demonstrate your financial need.

About the Author

I'm a veteran freelance writer with more than 15 years experience writing for newspapers, consumer magazines and trade publications. My stories have appeared in the Chicago Tribune, Washington Post, Christian Science Monitor, BusinessWeek Online, Business 2.0 Magazine and many other publications. I am also the managing editor of a real estate magazine based in Chicago and the writer of www.propertycrossroads.com, a blog devoted to residential real estate. This year, my first comic-book series, GEARZ, was published by Blue Water Publishing. The company will be publishing three other of my comic-book mini-series in 2008 and 2009.

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