How to Extend Mortgage Terms

by Amber Keefer, Demand Media
    Taking out a longer term mortgage loan will lower monthly payments.

    Taking out a longer term mortgage loan will lower monthly payments.

    Extending your mortgage term can lower your monthly payments or help you avoid possible foreclosure. Still, you should give the decision to extend your mortgage loan some careful thought. While there are certain advantages to lengthening the amortization period of a home loan, the loan will cost you more money in the end. There are steps you can take before extending the original repayment term of your mortgage.

    Step 1

    Write down the reasons you want to extend the term of your loan. Perhaps you can manage your mortgage payments better if they are smaller once you extend your mortgage. Jot down any pertinent notes as to why you aren’t able to maintain your current mortgage agreement. Perhaps your employer downsized or you have been ill. If you are honest about your present difficulties before you fall too far behind on your mortgage payments, your lender may be more willing to work with you.

    Step 2

    Contact the lending institution that services your loan. Explain why you want to extend the term of your loan. Provide details about why you are having difficulty making payments. Ask if the lender is willing to change your loan agreement to give you more time to pay off your loan and consequently lower your monthly payments.

    Step 3

    Discuss forbearance options with your lender. Some lenders will allow you to pay only the interest on your loan until your financial situation improves. Your lender may offer to extend the length of your loan once you are ready to begin making your regular mortgage payments again. Otherwise, you would have to make large payments to make up for the months when you weren’t paying on the principal balance of your loan.

    Step 4

    Ask your lender to put any agreement you make in writing. Read the new mortgage agreement carefully before you begin making payments according to the latest loan terms. Have an attorney or other financial advisor look over the terms if you have questions.

    Step 5

    Refinance your mortgage loan. The refinance option is one way to extend the term of the loan if you don’t mind starting the clock over again. Refinancing usually is not a practical choice unless you plan to live in the home for at least three to five more years, as it will cost you money to refinance the loan. Bankrate advises considering how many months it will take you to get back the closing costs to refinance). You must then decide whether the lower payments that come from extending the loan will be worth it.

    Step 6

    Find out if you qualify for the federal government’s loan-modification program. Loan modification allows lenders to lower your interest rate, extend your loan and take other steps to help you to catch up and stay current. A loan can be stretched out over as long as 40 years, which will reduce the monthly payments.

    Warning

    • Extending the term of your mortgage loan can make your monthly payments more affordable. However, you will end up paying more money in interest charges.

    About the Author

    Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.

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