QandAs: Loans

What is a Loan Mod?

Answer:
“Loan mod” is an abbreviation of

the words “loan modification.” This type of modification to a loan is permanent, and a person may look for a loan mod for a variety of reasons.

First and foremost, a loan mod is used when the borrower is at risk of defaulting on his or her loan. It is always best to ask for a loan mod before defaulting on a loan, as the lender is much more likely to work with you while you are still in good standing. Most people ask for loan mods when they don’t think they will be able to make the payments at the current amount.

A loan mod will usually be used on a mortgage, but some lenders will issue a loan mod on another type of loan, such as a student or car loan. If a lender agrees to a loan mod, the amount of the monthly payment will likely be reduced, and the interest rate and length of loan may also be adjusted.