Can a restructured mortgage include an interest rate reduction?
Yes – to lower monthly payments, a lender might decrease the mortgage interest rate either permanently or temporarily. Q: What is a principal reduction? A: A principal reduction, or forgiveness, lowers the total principal amount the borrower owes on the mortgage. That, in turn, decreases the monthly payment. Q: How can changing the length of the loan help a struggling borrower? A: To lower payments without changing the interest rate, a lender can extend the time required to pay off the loan. For example, a lender might restructure a 30-year mortgage as a 40-year loan, shrinking the payments by stretching them over an extra 10 years. Q: What is a short sale? A: A short sale is when a lender allows a borrower to sell the home for less than what’s owed on the mortgage, and accepts that amount as enough to satisfy the debt. For a borrower, a short sale is less detrimental on a credit report than a foreclosure, but it’s still a hefty stain. Q: What other methods could lenders be using to he
