Mortgage Modification – Get Your Basics Right

Homeowners with underwater mortgages are aware of the difficulties people face in order to qualify for mortgage modification programs. The situation is grimmer since the lenders are already engrossed with overwhelming applications for first-lien mortgages and refinance loans. However, underwater mortgage borrowers need not have to press the panic button so as to get qualified for mortgage forgiveness from their lenders. All they need to do is to understand the requirements for qualifying and work accordingly so that the mortgage modification deal is approved by their lender.

Mortgage Modification Eligibility Criteria

Struggling mortgage borrowers should be aware of the differences between government-approved loan modification programs and private lender crafted mortgage relief plans. Generally speaking, borrowers have to prove serious financial crisis to the lenders that is preventing them to make the loan payments. However, they need to reveal a steady source of income through which they’ll be making the monthly payments as per the revised loan agreement. Apart from that, their existing monthly payment amount should be more than 31% of their monthly disposable income.

How Mortgage Modification Helps

Here are some of the advantages to modify one’s existing mortgage repayment agreement:

1. Prevention of foreclosure – While borrowers are going through their loan modification programs, lenders can’t initiate foreclosure proceedings against them.

2. Renewal of agreement – In a loan modification program, lenders will customize the current mortgage papers and provide a fresh opportunity to the borrowers. It helps them to manage their properties and mortgage payments comfortably. Moreover, their credit accounts will be made current devoid of past defaults.

3. Reduction of monthly payable amount – Through a mortgage modification program, monthly payment amounts are lowered by reducing the interest rates levied on the loans. Borrowers are exempted to pay for closing costs, surveys, appraisals or taxes while going through this kind of mortgage relief program.

 How To Qualify For Mortgage Modifications?

Here are the steps that will help borrowers to qualify for the mortgage modification programs:

1. Payment Difficulty – Borrowers have to explicitly explain to the lenders about their struggle to make the loan payments in a hardship letter. They must mention the reason for falling back on making the monthly payments. For instance, loss of employment, hike in interest rates (in case of adjustable rate mortgages), divorce etc.

2. Repayment Plan – Borrowers may work with a mortgage modification attorney in order to create a convincing repayment plan that will be tough for the lenders to reject it outright. Moreover, lenders should be convinced about the borrower’s desire to hold on to the current house.

3.  Additional Income – Borrowers should find an additional source of income and inform about the same to the lenders. They should use the extra income to make the loan payments according to the revised agreement.

4.  Cost Control – This one of the most important step borrowers must take in order to straighten up their financial condition. They need to follow a proper budget and reduce bad expenses.

Hence, reducing costs and saving more money will convince the lenders to approve the mortgage modification applications of the borrowers.

Wallingford Real Estate – Wallingford, PA 19086