Do You Qualify for a Loan Modification?
Not everyone qualifies for a loan modification. How can you be sure to get your application to the front of the line and have the best chance for approval?
Here are 3 important qualifications for approval you should know before you begin the loan modification process.
- Financial Hardship — You
must be able to demonstrate to your lender that you have suffered a
financial hardship that has made your current mortgage payment
unaffordable. There are certain circumstances that lenders will
consider as an acceptable hardship situation including divorce/separation,
military service, death of a family member, job loss, reduction in
income, medical expenses, illness, incarceration and job transfer. Loss of equity alone
does not qualify.
- Ability to Make Payments — You'll have prove to your lender that if
given the new lower modified mortgage payment, you'll be able to
afford to maintain it now and in the future. Lenders want to know that
you will not be at risk of defaulting again. Providing the required financial statement
will demonstrate your ability to pay the new payment and help convince
your lender to grant an approval for your proposed new lower payment.
Your current mortgage payment, including your property taxes,
homeowners insurance and any homeowner's dues, must equal more than 31%
of your gross monthly income. Learn how to calculate your new target
payment based on the Obama HAMP guidelines. If you are confused about
how to do this, use the software program designed specifically for
homeowners that automatically does all the calculations for you.
- The Modification is Appropriate — Your lender will want to make sure that the modification you propose is an appropriate option given the characteristics of your mortgage and the value of your home.
- Complete and Accurate Application — Be sure to submit an accurate and complete application to your bank for review and consideration. Your lender will make a decision based in large part on the information you provide to them, and submitting an incomplete and poorly prepared application can result in a denial of the help you need. Be sure you prepare the paperwork properly and then submit everything your lender will need all together in a professional and acceptable loan modification package.
If you meet the above requirements, you may be eligible for a loan modification.
Learn more about loan modifications
- The Federal Loan Modification Program
- Do You Qualify for a Loan Modification?
- The Loan Modification Process
- Loan Modification FAQ
- Making Home Affordable.gov
Explore all the options to avoid foreclosure
Find out if a loan modification can save your home. Call Peter at 800.611.5126 for a free consultation to see if you qualify.