Mortgage Loan Mod: Tips For Obtaining A Modification
Mortgage Loan Mod: Techniques For Negotiating A Revised Loan
If you are one of the many homeowners in this country who is in real danger of foreclosure on your home, there is hope. Although hundreds of thousands have already lost their primary resident, a mortgage loan mod can help to reduce your chances of being a new statistic. There are few things you must know before successfully getting your mortgage adjusted.
What is a mortgage loan modification?
Don’t confuse a mortgage modification with a refinance on your home. The original mortgage loan consists of three components that combine to set the amount of monthly loan payment. The mortgage payment is defined by the principal, length of the loan repayment period and by the rate of interest to be charged. Modification does not require you to go through credit score checks, and other qualifying documentation procedures that would be required by a refinance.
As recently as two to three years ago, many banks and lending companies were making risky, upside-down loans that homeowners could not afford. The loans were too large, may have had variable interest rates and were spread over thirty or more years. A modification of a loan adjusts one or more of these factors so make the monthly mortgage payments affordable to the homeowner.
What you Need to Get a Loan Modification
The minimum requirements to obtain a loan mod are fairly simple and few in number. The first requirement is an inability to make the payments as structured. You, or another wage earner in the household may have become unemployed. Death or a major illness is accepted as a reason.
The mortgage payment must be more than 30 percent of your income to be eligible. Some modifications have been approved with percentages as high as 79 percent. The original mortgage can’t have been issued less than nine months previously. Perhaps more importantly, the modified mortgage monthly amount must be at a level that can be maintained in the future.
What can the Lender Do?
Banks have been directed to make every effort to modify monthly mortgage payments in an effort to prevent the increasing level of homeowners from losing their homes. The housing market has deteriorated as the inventory of unsold homes increased drastically. Some speculators have purchased homes in foreclosure for just pennies on the dollar. Lenders are urged to modify terms to reduce the monthly payment account.
Face Up to the Problem
Homeowners should not be embarrassed to be in danger of being foreclosed upon. The economic factors that created unemployment are far beyond being the responsibility of just one person or business. If you refuse to take action though, you will be costing yourself and your family far more than the loss of pride.
Completing a mortgage loan mod application is not a difficult or a time-consuming process. You should contact your lender with needed information such as the amount and terms of the original mortgage, a projected income level and expense itemization that will show you can handle the lowered payment.
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