A Home Loan Modification is the greatest solution to financial trouble for houseowners seeking mortgage help, and as such has been the receipt of a large amount of news consideration in lieu of the dawning of the mortgage crisis.
Most reasonably, you are here owing to that fact you have heard about Mortgage Loan Modifications, the potentiality they possess to benefit just about every person, whether you are behind or current on your mortgage loan, and your to all appearances hunting for further info on Mortgage Modifications and loss mitigation techniques.
My desire through this paper is to aid you in becoming a Home Loan Modification pro, so read on!
We're going to check out the nitty-grittys first:
What is a Mortgage Loan Modification?
A Loan Workout is a fixed change in the conditions of your existing mortgage as negotiated by you, the homeowner and your lender.
Why on earth do I need a Home Loan Modification?
A Mortgage Modification can do a number of awesome things for you. First, the best Mortgage Modifications lower interest rates, and of course, lower payments. There are homeowners throughout the country saving a good deal of money each month on account of Home Loan Modifications.
Added benefits of a Home Loan Modification include the potentiality of a diminution in the moneypayable (principal balance reduction), a alteration in the period of the mortgage, converting the loan into a lower, fixed-rate mortgage, and even forgiveness of late fees and legal fees.
Saving money each month? Lowering my interest rate? Wow that sounds great. What's the catch?
Why would my lender help me?
Your mortgage lender has lost a huge amount of money due to foreclosures; most of the homes they foreclose on are underwater, meaning that the defaulted loans are significantly higher than the values of the properties. Sure, your lender will "lose" money when your payments go down, however, receiving any mortgage payment from you is better than no payment at all, or worse, having to foreclose on you.
How do I get a Home Loan Modification?
Friends, the name of the game is hardship. Well, it goes a little beyond simple hardship, but that's what we're going to start with. The first step to getting a Home Loan Modification is showing your lender that you simply can no longer afford to make your mortgage payments on time.
Now, different lenders obey different criteria for determining your "affordable" payment. Many lenders participate in Making Home Affordable, for example, wherein and aside from other guidelines, your "affordable" payment is 31% of your gross income (income before taxes).
Other lender's use different guidelines to qualify you. With Indymac, for example, the magic percentage of your gross income is 38% (under FDIC's Mod-in-a-Box program). This "affordable" payment is the total of your Principal, Interest, Taxes, Insurance, and HOA Fees (if applicable).
Still other lenders utilize an archaic system of totaling up your total net income, then subtracting expenses. For many "in-house", non-Government backed Mortgage Loan Modification programs, lenders may use a combination of both qualification methods.
Getting qualified is as simple as contacting an expert who can aid you. An expert can also aid you hit key target hardships that will aid you qualify for a Loan Modification, and, being a wonderful expert, I'm going to give you a couple of the best hardship's for free, right here!
Justin's Acceptable Mortgage Modification Hardships
Reduction of Income. I.e. - Unemployment, underemployment, reduction in work hours, reduced pay, decrease in business earnings (if you are self-employed).
Change in household finances. I.e. - Death in family, illness, divorce, incarceration, disability, adoption, child birth, care of relatives and family.
Increased expenses. I.e. - ARM (Adjustable Rate Mortgage has adjusted or will adjust), medical and health care bills, utility bills, increased taxes.
Insufficient assets. I.e. - Cash reserves are not enough to pay mortgage and basic living expenses.
Monthly debt payments are too much! I.e. - Too many credit cards, home equity loans, other credit loans are choking me!
A Quick Guide to the Loan Workout Process
1. Write a Hardship Letter. For help on this, visit my website in the resource box below.
2. Get on the phone with your loss mitigation department. For a complete list of all lenders and contact numbers, again, check out my website in the resource box at the end of this article.
3. Set realistic expectations, and document your conversation with your lender - start a log - called Countrywide, 12:00 pm Saturday the 29th, spoke with Dave regarding HAMP Loan Workout, faxing over required documents.
4. Send required documents that your lender needs - Bank statements, tax returns, paystubs, etc.
5. Negotiate for the best terms that you can on your Loan Modification.
6. Sign your Loan Modification agreement.
Alrighty, hopefully you've got a pretty good idea of what to do to get a Mortgage Loan Modification. If you need information, the best place to get assistance is the resource box below. We've covered a good deal of Loan Workout advice , but there's a good deal more Mortgage Modification counsel that you should know prior to contacting your lender, for example, which programs your lender participates in, and what the guidelines are of those programs. Also, you may want to find a direct contact number so that you don't have to wait on hold for hours and hours. We've got that and more; check us out by clicking on any of the links in the resource box: