Yesterday we discussed the 5 myths that people should avoid when thinking about trying to get a loan modification, sometimes called a workout. Today we have more good advice from Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, LLP. Ralph recently released a list of the top requirements needed for loan modification qualification. Many of the requirements are the same as would be needed later for justifying a short sale, so you might as well get them together now, while there’s still a chance to save your house. If worse comes to worse, at least you’ll be prepared to go after a short-sale agreement with your bank.
“Homeowners facing foreclosure may consider loan modification a possible solution but often wonder whether it’s worth the time and effort,” says Ralph. “While the truth is that you won’t know until you actually apply, there are several factors that you will most certainly have to address.”
The following list is designed to help consumers understand the most important types of information they will need in order to qualify for a loan modification:
1. A statement showing your willingness to keep your house. Your lender wants to see that you are committed to a long-term solution.
2. A hardship letter describing the event that has made your monthly mortgage payments unaffordable. Hardships can include loss of job, reduction in pay, medical illness, costly medical bills, a sudden and significant interest rate increase on an adjustable rate mortgage (ARM), and so on.
3. Your ability to afford a reasonable lower monthly payment. Lenders can employ several different methods to lower your monthly payment, including dropping the interest rate, spreading payments over a longer time period (For ex. 40 years rather than 30), reducing the balance due, forgiving late payment penalties and fees, and rolling missed payments into the balance due. If the lender is unable or unwilling to reduce the monthly payment to an amount you can afford, you won’t have a successful loan modification – nor would you want to.
4. Supporting documentation, including W-2’s, current credit report, pay stubs, federal income tax returns, bank statements, and so on.
To read Ralph’s full article on this and other topics related to loan modification please visit http://www.keepmyhouse.com/.
It’s important to not put off gathering the items on this list and to make the call to your lender to see if they will do a loan modification. More and more banks are moving in that direction as they try to avoid an increased inventory of foreclosed homes and as they try to work with Federal officials who are now pushing them in this direction. The banks can’t help you; however, if you never call as ask for help. When you do, you’ll need to be prepared with the items in this article. So get started, now.
“Homeowners facing foreclosure may consider loan modification a possible solution but often wonder whether it’s worth the time and effort,” says Ralph. “While the truth is that you won’t know until you actually apply, there are several factors that you will most certainly have to address.”
The following list is designed to help consumers understand the most important types of information they will need in order to qualify for a loan modification:
1. A statement showing your willingness to keep your house. Your lender wants to see that you are committed to a long-term solution.
2. A hardship letter describing the event that has made your monthly mortgage payments unaffordable. Hardships can include loss of job, reduction in pay, medical illness, costly medical bills, a sudden and significant interest rate increase on an adjustable rate mortgage (ARM), and so on.
3. Your ability to afford a reasonable lower monthly payment. Lenders can employ several different methods to lower your monthly payment, including dropping the interest rate, spreading payments over a longer time period (For ex. 40 years rather than 30), reducing the balance due, forgiving late payment penalties and fees, and rolling missed payments into the balance due. If the lender is unable or unwilling to reduce the monthly payment to an amount you can afford, you won’t have a successful loan modification – nor would you want to.
4. Supporting documentation, including W-2’s, current credit report, pay stubs, federal income tax returns, bank statements, and so on.
To read Ralph’s full article on this and other topics related to loan modification please visit http://www.keepmyhouse.com/.
It’s important to not put off gathering the items on this list and to make the call to your lender to see if they will do a loan modification. More and more banks are moving in that direction as they try to avoid an increased inventory of foreclosed homes and as they try to work with Federal officials who are now pushing them in this direction. The banks can’t help you; however, if you never call as ask for help. When you do, you’ll need to be prepared with the items in this article. So get started, now.
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