How to Modify Your Mortgage If Facing Hardship

mortgage modification hardship

Mortgage modification can be an option when facing financial hardship. To qualify for a mortgage modification based on hardship there are some basic steps you can take.

Difficulty:

Moderate

Instructions

1. First do some investigation to determine what qualifications are necessary to modify your mortgage if you are in a situation of financial hardship.

2. To qualify for a mortgage modification some basic guidelines must be met such as length of mortgage, loan amount, loan status, type of occupancy, and front end DTI (Debt to Income) target ratio.

3. Figure your debt to income ratio yourself by taking your gross monthly total family income and dividing by your PITIA, (principle, interest, taxes, insurance, association fees).

4. This ratio must fall into a certain category and some documentation may be needed to accurately assess this by your lending agency. Usually two recent pay stubs, a tax form, and a property valuation, and your current loan status are used as income and asset valuation for approval to modify.

5. It is also a good idea to submit a letter of hardship requesting to modify your home mortgage to your lender. This letter explains the reason for your financial hardship and your intent to resume payment under a modified contract agreement.

6. If you are approved for a mortgage modification hardship loan, you must then successfully complete a standard trial period and if your loan stays current under that period you may resume payment under the new modified program.

Resources

• Sample hardship letter
• Sample Letter for Credit Repair