Knowing how to negotiate with your mortgage lender could be the key to keeping your home. Many people do not even try to negotiate because they believe that they have no chance in getting a lender to work with them. However, according to the Federal Deposit Insurance Corporation, lenders stand to lose an average of $50,000 per foreclosure. With this in mind, you should at least try to take advantage of every tool available from lenders to keep your home.
How to Negotiate to Stay in Your Home:
- Grab yourself an experienced foreclosure attorney. A foreclosure attorney will be prepared to handle negotiations with mortgage lenders and engage in litigation if needed. If you feel threatened by foreclosure and want to save your home, it may be time to explore your legal options.
- Evaluate your financial condition. Lenders generally like to see mortgage payments remain at or below 33 percent of gross income. Therefore, you will want to calculate the percentage of your fixed expenses relative to your gross income.
- Assemble all necessary financial documents before approaching your lender. Lenders generally request the following documents when considering any type of loan application. Include your most recent:
- Pay stubs
- Tax returns
- Proof of employment
- Credit report
- A letter explaining your current situation
- Put together a financial worksheet. This should include all the bills you currently pay and compare this against the total of all your income received. Note that lenders generally favor a fixed-expense-to-income ratio of roughly 33%. You need to show your lender that you are willing to make sacrifices to continue payment, so think of expenses you can cut and bring them up in your meeting.
- Call your lender and explain your situation prior to a formal meeting. In this call, ask them to go over any options that could help you keep your mortgage current or make payments more affordable. Explain what you need help with and get in touch with the right contact person.
- Request information about payment options. Circumstances may differ in every situation. If you experiencing short-term financial hardship, you may request one of the following:
- Payment suspension
- Lump sum payment at a future date
- A repayment plan
- A loan modification should be considered. You should try to re-negotiate the terms of your loan if you foresee a long-term decline in your financial status. If you have an adjustable-rate mortgage with an interest rate about to reset higher, this is particularly useful, and your lender may be more willing to work with you in this case due to government scrutiny on these loans.
Mortgage lenders are more willing than ever to work with borrowers to keep them in their homes. This isn’t altruism on their part, but a combination of their own financial interests and pressure from the federal government to provide some relief to borrowers.
You are not guaranteed to receive better mortgage terms or modification, but it cannot hurt to try, and along with knowing how to negotiate, your efforts may be rewarded with the ability to stay in your home!
Get The Legal Help You Need With Your Home Foreclosure
Tips on how to negotiate with a lender can certainly help you keep your home, but mortgage negotiations can be complicated, so contacting an experienced foreclosure attorney in the Chicago area is a good move.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.