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They were hoping to refinance to cheaper mortgage at later point. However, due to falling home prices, most people could not opt for refinance as they owed the banks more than what they would get from a buyer.In addition, many homeowners were facing the prospect of their adjustable rate mortgages adjusting. This would mean that the monthly payments could end being double or triple for certain homeowners.
Taking this scenario, it makes sense to request the lender to change the adjustable rate mortgage to a fixed rate mortgage. In fact, there are lenders who will be willing to do this conversion. But the question is how to request a mortgage rate adjustment.
The first thing is to write a hardship letter to the letter. Here you should highlight why you are unable to make the monthly payments. Make sure you have a financial plan in place before writing this letter as your hardship letter should also include a solution for the problem.
Include your total income and expenses so that the lender. In order for the lender to change the rate from, he would have to be convinced that your income is more than your expenses. This could mean cutting down some things which are not essential or taking up a part time job. Basically this will show the lender that you are taking measures at your end to resolve the situation you are in.
Also request the lender to change the adjustable rate mortgage to a fixed rate mortgage. In does not harm to ask for the term of the loan to be extended. Usually financial institutions rather help borrowers than go for a foreclosure. So, with this hardship letter and a detailed financial plan, your lender might be willing to change the mortgage type.
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