Definition
A permanent change to one or more terms of an existing mortgage to make payments more affordable and prevent foreclosure. Modifications may reduce the interest rate, extend the loan term, reduce the principal balance, or change the loan from an ARM to a fixed rate. Borrowers must typically demonstrate financial hardship to qualify. Unlike refinancing, a modification does not replace the existing loan with a new one.
Related Mortgage Terms
- Foreclosure
The legal process by which a lender seizes and sells a property when the borrowe...
- Refinance
The process of replacing an existing mortgage with a new one, typically to secur...
- Default
The failure to meet the legal obligations of a mortgage, most commonly by missin...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.