It is a given fact, especially with the given global economic crisis, that some borrowers may default on their mortgages. This is the reason why lenders are so keen on the terms of agreement signed by both parties. However, a borrower can seek modification loan terms from his creditor. This is the process of altering the original terms of agreement between the borrower and the lender.

With modification loan, the borrower can be given the following options:

• Rate reduction – usually a shift from floating to fixed rate
• Principal amount reduction – arrangement to apply payment solely to the principal so as to decrease monthly dues
• Increase term of loan – this is an extension of the time of repaying the loan