A loan modification is a change to the terms of an existing loan agreement. It can be used to make a borrower’s loan more affordable by reducing the interest rate, extending the loan term, or modifying the type of loan.
Loan modifications can be useful for borrowers who are having difficulty making their monthly loan payments. By changing the terms of the loan, a loan modification can make the payments more manageable, allowing the borrower to avoid defaulting on their loan.
Loan modifications can be requested by the borrower or offered by the lender. In some cases, the lender may be willing to modify the loan voluntarily in order to avoid the cost and hassle of foreclosure. In other cases, the borrower may need to provide evidence of financial hardship in order to qualify for a loan modification.
Overall, loan modifications can be a good option for borrowers who are struggling to make their loan payments but want to avoid defaulting on their loan. It is important to carefully consider all of the potential pros and cons before pursuing a loan modification, and to work closely with the lender to ensure that the modified loan terms are fair and affordable.