Qualifications Required to Renegotiate Mortgage Rate
Renegotiating the interest rate that your lender charges for your mortgage can make a significant difference in the amount of money you pay each month to finance your home and can even save you hundreds of dollars every month.
The Pros of Renegotiating
For example, you’ll pay about $192 less per month just by dropping the interest rate from 7 percent to 5 percent on a 30-year fixed-rate loan for $150,000. You will however, be required to meet certain qualifications before renegotiating the mortgage rate with your lenders.
Prove Financial Hardship
Before a lender agrees to renegotiate your mortgage loan interest rate you will most likely be required to prove you have indeed, suffered a significant financial hardship.
Most likely you will have to write a financial hardship letter explaining in detail why you are no longer able to afford your current mortgage payment, and why a lower interest rate would help ease your financial burden.
Reasons may include job loss, a drop in monthly pay or a serious illness that interfered with your ability to work. But make sure you write exactly why you are seeking a lower interest rate.
You might also be asked to provide verification of your financial hardships by sending your lender supportive paperwork such as your two most recent paychecks or your current bank account statements.
Financial Hardship due to Secondary Residences
It’s rare that a mortgage lender will approve rate reductions for second or vacation homes, so it’s suggested that you should only be seeking a lower interest rate for the mortgage on your primary residence. But, if you are facing financial stress due to a monthly mortgage payment on a second home, you will probably have to either sell it or rent it out in order to find the financial relief you are seeking.