Can I Get a Loan Modification?
A loan modification can be an effective way to get a more affordable mortgage payment when you are having a hard time making ends meet. Although you may be interested in modifying your mortgage, you may not be able to qualify for a modification. Understanding what borrowers look at can help you determine if you have a good chance of being approved for a modification.
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Working With Your Lender
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When you are having difficulty making your mortgage payment, you may have the option of applying for a loan modification with your lender. With this process, you will not know whether you can modify your loan until you apply and get approved. Each lender has different requirements. The lender will most likely have an application, and you will have to provide financial documents to prove that you have a genuine financial hardship.
Home Affordable Modification Program
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The Home Affordable Modification Program or HAMP is a government program to help homeowners modify their mortgages. This program provides financial incentives to banks for allowing customers to modify their mortgages. To get involved, you have to meet certain eligibility guidelines and then apply for it. HAMP works as an intermediary between you and your bank to facilitate the process of a loan modification. Your mortgage does not have to be insured by Fannie Mae or Freddie Mac.
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HAMP Qualifications
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To get involved with HAMP, you have to fit into the criteria. For instance, the modification has to be for your primary home and for rental properties or for a vacation home. The program also has maximum amounts for the total loan that can be modified. For example, with a one-unit home, the maximum loan amount that can be modified is $729,750. You also need a monthly mortgage payment more than 31 percent of your total monthly income.
Debt-to-Income Ratio
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Representatives from your bank probably want to look at your debt-to-income ratio. The ratio is a comparison of how much money you pay in debt payments each month in relation to how much money you make on a monthly basis. Each lender has a specific ratio requirement.
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