Mortgage Modification Tools
The government's Home Affordable Modification Program can provide you with financial relief if you are struggling to make your mortgage payments each month. Under this program, the government persuades lenders to lower the mortgage payments of homeowners who are struggling with financial difficulties. The government does this by providing lenders with financial incentives for the modifications that they perform. The challenge for homeowners is qualifying for one of these modifications. With the right tools, though, homeowners can increase their odds of lowering their payments through this program.
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Financial Hardship Letter
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The most important tool for a successful mortgage loan modification is a well-written financial hardship letter. To qualify for a modification through the Home Affordable Modification Program, homeowners must convince their mortgage lenders that they are facing serious financial setbacks that make paying their monthly home loan bills impossible. Homeowners need to clearly state their hardships in their hardship letters -- whether they or their spouses have lost jobs, they've suffered through an injury that has prevented them from working, they've had their overtime hours eliminated or their monthly mortgage payments increased dramatically. They can then send the letter to their lenders, who will consider the letter when determining whether to approve a modification.
Backing Up the Letter
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A clear hardship letter isn't the only tool that homeowners will need to land a mortgage modification. They'll also need the financial paperwork to back up the claims they've made in the hardship letter. Homeowners need to make copies of such documents as their last two paycheck stubs, most recent credit card bills, latest mortgage statements, current bank savings and checking account statements and their last two years' worth of federal income tax statements. These documents can show lenders that homeowners have suffered a drop in their gross monthly incomes, while their monthly debt obligations have not lessened.
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A Good Payment History
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To qualify for a government-assisted mortgage modification, homeowners will need to be current on their mortgage loan payments. For the government, homeowners qualify as being current if they haven't paid their mortgage bill more than 30 days late in the past 12 months. Homeowners who are behind on their mortgage payments will not be eligible for a modification through the government program.
Strong Credit Score
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Homeowners seeking a modification through the government program will work directly with their existing mortgage lenders. These lenders look at many of the same financial factors when deciding who gets a modification and who doesn't. Lenders will want to work with homeowners with strong three-digit credit scores -- above 700 on the popular FICO credit-scoring system. There's a reason for this: These homeowners have a history of paying their bills on time. The odds are higher that they'll make their newly modified mortgage payments on time than they are with a homeowner with a low credit score.
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