Homeowners in New York and throughout the country may have multiple options when it comes to refinancing or modifying the terms of their mortgages. For instance, a lender may agree to reduce the interest rate on the loan or extend the repayment term in an effort to lower the monthly payment. Lenders may also be willing to add missed payments to the end of the loan or to forgive a portion of the outstanding balance.

Borrowers may choose to negotiate a custom modification plan with their lender or opt for plans offered by the government. Generally speaking, modifying a loan is easier than refinancing because there are fewer criteria for doing so. Typically, those with low credit scores or who have negative equity in their homes won’t be able to refinance their mortgages. It may be possible to seek a loan modification after filing for Chapter 7 or Chapter 13 bankruptcy.

While a bankruptcy case is open, lenders cannot foreclose on a property. Therefore, borrowers may have leverage to negotiate a lower interest rate or other favorable loan terms. However, a court will likely need to approve any changes to a mortgage, and this may be true even if the lender agrees to change the terms of a home loan. Filing for Chapter 13 bankruptcy may make it possible to remove mortgage arrears.

Individuals who are seeking to change the terms of their home loans may want to do so with the assistance of a real estate attorney. An attorney may work with a government or private lender on behalf of his or her client to negotiate favorable loan modification terms. Legal counsel may also represent property owners who want to modify the terms of a mortgage by filing for Chapter 7 or 13 bankruptcy protection.