Renegotiating your mortgage interest rate is a key way to protect your home from foreclosure. If your initially low adjustable or interest-only interest rate has risen as the loan matures, a refinance can convert these types of loans into a low fixed rate mortgage. If you don't qualify for refinancing due to poor credit, renegotiating your rate is the next best thing to bring down your mortgage rate.
Gather proof of monthly income. Make photocopies of paychecks, bank statements and other sources of income to show your mortgage lender. Your mortgage lender will examine your income to see if you are eligible for a loan modification or renegotiated interest rate.
Write down your monthly expenses. Along with income statements, lenders want to review your monthly expenditures to see if you're overextended financially. Record all your monthly expenses such as housing, transportation, utilities and insurance.
Draft a hardship letter. This letter explains your reason for seeking a modified interest rate. Because this provision helps distressed homeowners, you'll need to provide specific reasons for your request such as loss of employment or illness.
Approach your lender. Call your mortgage lender and ask to speak with someone in the homeowner retention department. Express your wish to renegotiate your interest rate. Fax or mail the above documentations to your lender for review, and work with the representative to negotiate a more affordable home rate.
Things you need
- Income statements
- Hardship letter