What Types of Loan Modifications Exist?

Options for Loan Modification

Banks can change the terms of your loan to make the payments more affordable. These changes are often called loan modifications, and they may be permanent or temporary.

• What is a Loan Modification?

There are several ways they can accomplish this:

• Refinance the loan
• Allow you to skip payments, and add those to the end of your loan
• Reduce the total amount of your loan (forgive principal)
• Reduce the interest rate charged (APR)
• Extend the loan term

To see how changes in the interest rate, term, and principal amount affect your monthly payment, see our Loan Amortization Calculator.