How to Apply & Qualify for a Loan Modification
Getting a loan modification can provide you with a way to get a more affordable monthly mortgage payment. Each lender and program will have different qualification standards which must be met before you can get access to a lower payment. Once you qualify, your lender may be willing to lower your interest rate, or give you a longer amount of time to pay off the loan. Talking to your lender is essential to completing this process.
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Instructions
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Contact your lender about potentially allowing you to modify your loan. Once you receive a notice in the mail that tells you your mortgage is in default, you can contact the lender's loss mitigation department. This is a department that lenders have which will potentially work with you to explore your options in this situation. Your lender may be willing to work with you to facilitate a loan modification because it does not want to have to foreclose on your house. If the lender can keep you in your home, it can continue to receive regular mortgage payments.
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Contact a government program such as the Home Affordable Modification Program, or HAMP. This program that provides financial incentives for lenders that allow troubled customers to modify their loans. This program can work with you and your lender to facilitate some type of solution to the problem.
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Review the qualification guidelines for the program that you are applying for. If you are working with HAMP, you will have to meet their specific qualification guidelines. For example, you have to have a mortgage payment that is in excess of 31 percent of your monthly income. The house also has to fit into certain value limits before you can qualify. For instance, if you have a single family home, the value of the house has to be less than $729,750. The loan on your house has to be a first lien, and it must have been created before January 1, 2009.
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Provide the necessary documentation to your lender to facilitate the process of a loan modification. The lender will request some documents from you to process the request. You will have to provide some financial information, like your bank statement and a summary of your expenses and income. You will also have to give your lender a hardship letter that details the financial hardships that you have experienced which led you to this situation. Most lenders have an application form that you will have to fill out, as well, to be considered for a loan modification. Once you provide the lender with the appropriate documentation, it will review it and then issue a decision.
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