Mortgage Modification Advice
Mortgage modification helps mortgage holders in jeopardy of losing their property to home foreclosure. Several reasons justify a homeowner getting behind on their payments. Some people lose jobs or have their hours cut in half. This results in income problems and late mortgage payments. With a mortgage modification, these owners can keep their houses and enjoy better terms.
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What is Modification?
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Owners should not confuse mortgage modifications with mortgage refinances. Both mortgage processes help owners secure lower interest rates on their home loans, which also helps lower the monthly payment on mortgages. However, modifications do not entail completing a new home loan application or re-qualifying for a home loan, as does refinancing. Instead, a mortgage lender reviews an owner's situation, and if there's an imminent risk of foreclosure, the lender can reduce its rate and payment to help them avoid foreclosure.
Know What You Can Afford
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Knowing what you can afford before contacting your lender can help facilitate the modification process. For example, if currently paying $1,400 a month on your home loan, but you can comfortable afford $1,000 a month, bring this to your lender's attention early on. They will either accept this amount or meet someone in the middle.
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Seek Immediate Help
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Discussing your situation with your lender immediately is recommended when requesting modification help. Not everyone qualifies for home modifications, and if you miss several payments and fail to communicate problems with your lender, they may deny your request for help. Lenders typically take back properties after payments are 90 days late. Thus, it's imperative to act quickly and start the process as soon as possible. Some lenders require being behind at least 30 days before they'll assist you, whereas others will offer help if you've recently lost a job, become ill or injured, which increases the likelihood of foreclosure.
Document Hardships
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Documenting personal hardships is a required aspect of mortgage modifications. Accompany this letter, known as a hardship letter, with a list of your existing debts and a copy of income statements. Lenders need all three bits of information to determine modification eligibility. As a rule, mortgage lenders are more willing to modify an existing mortgage loan if monthly payments exceed 31 percent of your gross monthly income.
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