If you suffer an injury that's serious enough to keep you from working, or one that forces you to switch to a new position with a lower salary, you might be able to earn a mortgage modification from your mortgage lender. This will result in a lower monthly mortgage payment, and it could make the difference between you losing your home and keeping it. To earn a modification of your existing home loan, though, you'll have to provide proof to your lender of your disability and its impact on your earning ability.
Lowering Your Mortgage Payment
If you're struggling to pay your monthly mortgage bills because of a disability, you can request a lower mortgage payment from your current mortgage servicer. Your lender can reduce your home loan payments in one of several ways: It can rework the terms of your loan, perhaps changing your loan from a 15-year fixed-rate one to a 30-year fixed-rate loan. It can also drop your mortgage interest rate, or forgive a portion of your principal balance. All of these moves can leave you with a lower monthly payment, one that you'll be better able to afford even with your disability.
To earn a mortgage modification from your lender, you'll need to prove that you can no longer, because of a financial setback, afford to make your home loan payments each month. You'll have to prove, then, that your disability has reduced your earning ability. To prove this, make copies of any doctor bills or insurance claims that prove that you have had treatment for an injury. Make copies, too, of any incident reports that your employer has filed regarding your injury. You can also make copies of your last two paychecks if your disability has forced you to make the move to a position that pays less. Send these copies to to your lender.
You'll also need to write a financial hardship letter. This letter should explain clearly what disability you have suffered and why it has made it impossible for you to afford your existing mortgage payments. After writing this letter, send it to your lender, which will keep a copy of this letter as it debates whether to grant you a lower monthly mortgage payment.
Help from the Government
Lenders might be more willing to approve mortgage modifications today thanks to the federal government's Home Affordable Modification Program. This program provides lenders with a financial reward every time they modify the home loan payment of struggling homeowners. If you need to reduce your mortgage payment because you've recently become disabled, call your existing mortgage lender and ask if it participates in the government program. Most lenders do.