Basically a Mortgage Loan Modification is when your lender agrees to change the terms of your loan without refinancing or changing lenders.
Mortgage loan modification is the best programs for payment relief for homeowners, but like any government sponsored program it has specific guidelines and requires a lot of documents to qualify.
There are many factors that should be kept in mind while doing this, but the first thing is that you have to qualify for this program so that you can save your house and repay the loan. Although each lender mortgage loan modification program having different criteria most are now following the Making Home Affordable guidelines.
Primary qualifications for the Making Home affordable Mortgage Loan Modification Program:
- The home needs to be your primary residence.
- The amount owed should be either equal to or less than $729,750.
- You will need to have a genuine financial hardship that is causing you to not be able to make your payments.
- Your mortgage loan should have been written before January 1, 2009
- The current payments exceed 31% of your gross monthly income.
If you do not qualify under the above guidelines (i.e.; your loan amount is too high) it is likely your lender has their own guidelines which will be very similar and you can still qualify under their specific guidelines. Contact you lender and ask their requirements.
Once you determine you do qualify under your lender’s guidelines, you can apply for a mortgage loan modification. Completing the mortgage loan modification documents correctly will be critical to your approval. If you want a guide and all the insider formulas for what they want to see you can read our Loan Modification Guide for in depth instruction and to get all the forms you will need.
Steps to Apply for a Mortgage Loan Modification:
- Obtain the financial worksheets and loan modification documents from your current lender(s)
- Using their worksheet or your own calculate your income and expenses to figure out how much your mortgage payment would need to be so that is it no more than 31% of your income.
- Complete all the lenders paperwork making sure that after all expenses that you still show about 3% disposable income left over. Trick is making #2 and #3 work together.
- Gather all the required backup documents as requested by your lender. Sign and date all documents you are providing to them.
- Write your hardship letter. For a limited time we are giving away our Hardship Letter book chapter for free here: Loan Modification Hardship Letter.
- Compile all your paperwork and fax it in to the lender, keeping copies of everything you send.
For a detailed, to-the-point guide on how to modify your own loan, with all the forms, worksheets, and examples, go to our Loan Modification Guide web page. Our guide is all the help you need, with paying anyone, to get your mortgage loan modification done quickly and correctly by yourself.
