Renegotiation – First step before Refinancing

Renegotiated loan refers to a loan which all interested parties have agreed to modify in order to allow the borrower to meet their repayment obligations. Modifications can include the interest rate or the length of the loan. In some cases, the rate structure can be modified by changing from a fixed-rate to an adjustable-rate loan or vice versa. Another modification option is the forbearance, or temporary stoppage, of loan payments.

Typically, homeowners can qualify for renegotiation or modification of an existing mortgage if they are ineligible to refinance, are experiencing a long-term hardship such as a disability, or are several months delinquent on monthly payments and expect further difficulty making payments. Borrowers should be aware that a renegotiation of their loan often has an adverse impact on their credit score, even if they make all monthly payments on time.

To initiate a renegotiation, the borrower should contact their lender directly. A lender is often motivated to renegotiate as it is generally a preferable option to foreclosure, due to the costs and risks involved in that process. If the borrower is not successful in renegotiating a loan directly with their lender, most of the borrowers searching for refinancing options.

ZonaCredit has broad experience in renegotiation and refinancing and would be happy to direct and help any client request in that field.

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