The full explanation
It can extend the time you have to repay, lower the interest rate, or defer or reduce part of the principal balance, which can lower your monthly payment. Often you start with a trial modification for a few months; if you make those payments on time, the change becomes permanent.
An example
After her hours are cut at work, Gloria can no longer keep up with her payment. She calls her loan servicer and asks for a modification. Before accepting, she checks how much she will pay each month and how much she will owe in total under the new terms.
You will see it in…
- Your servicer's letters about your application for help (loss mitigation)
- The trial modification agreement
- Your mortgage statements after the change
