Mortgage Modification Strategy
You've made the decision to apply for a mortgage modification through the federal government's Making Home Affordable program. You've been struggling to pay your mortgage bills for months, and you want to reduce your monthly payments before you start falling behind. Qualifying for a loan modification, though, is not a simple process. You'll have to follow certain strategies if you want to convince your lender to rework the terms of your loan to lower your monthly payments.
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Start With Your Own Lender
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To start the modification process, you must first call your current mortgage lender. The federal government does not modify any loans on its own; it only provides financial incentives to encourage mortgage lenders to do this. Call your lender at the customer service number listed on your most recent monthly mortgage statement. Ask to speak to someone about a loan modification.
Explain Your Hardship
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To qualify for a loan modification, you'll have to first convince your lender that you've suffered a serious financial setback that has made it impossible for you to pay your mortgage bills. Tell your lender over the phone exactly why you are struggling to make your payments. You or your spouse may have lost a job, or your working hours may have been cut or overtime eliminated at your company. Maybe you've suffered a serious injury or illness and have not been able to work for a month or more. All of these are legitimate examples of financial hardships.
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Compose a Financial Hardship Letter
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Most lenders will require that you provide them with a financial hardship letter. This letter will detail the reasons why you are having difficulty making your mortgage payments. Again, clearly state why your gross monthly income has fallen enough to make covering your mortgage payments a burden. Also explain how much money you think you can afford to pay each month on your home loan. Once you've finished your letter, send it by mail, e-mail or fax to your lender.
Prove Your Hardship Claims
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Along with your hardship letter, send your lender copies of the financial paperwork that support your position regarding your hardship. These papers can include your last two paychecks if your monthly income has dropped, your most recent federal income tax return, your most recent credit card statements, and your current bank savings and checking account statements. Your lender will examine these documents to help decide whether to lower your mortgage interest rate, forgive a portion of your principal balance or rework the terms of your loan.
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