If
you got a mortgage on your home when the interest rates were high,
you may be thinking about having your home loan modified. Most people
seem to think it’s hard to get a home loan modification, and
they’re right--up to a point. Home loan modifications are doable,
but you need to be persistent if you hope to get one. Circumstances
need to be right, and you will have to meet certain criteria.
Following are a few tips for getting a home loan modification.
Satisfy
the Lender
To
be considered for a home loan modification, you must make the lender
feel comfortable with the process. They must be convinced that
modifying the loan will be to your financial advantage. They won’t
want to do it if they think you’re not going to be able to keep up
your payments--there’s no advantage to either you or lender if that
happens.
Income
to Debt Ratio
You
must be able to prove to the lender that your income to debt ratio
will allow you to meet the obligations of a home loan modification.
If you have a lot of debt, you will more than likely be turned down.
You need to let them know that your income is more than enough to pay
your bills and make payments on a restructured loan, if the mortgage
can be reduced. When you go to see your lender, you will need to have
a detailed list of all your expenses, and show how the income you
generate will be sufficient to keep up with payments on a new loan.
You need to remember that it’s not really in the best interest of
the lender to modify your loan, because they’ll be losing the
income they get from you if you continue paying off the interest on
the original loan.
Don’t
Wait too Long
The
earlier you begin the process of trying to get a home loan
modification, the better chance you’ll have of getting one. Don’t
wait until you fall behind on your payments or are actually in
foreclosure to apply. As soon as you perceive that you could end up
in financial trouble because of your home loan, start taking the
necessary steps to try and get the loan modified. Put together a list
of all your expenses, and weigh them against your income. You may
have to show a lender that you’re willing to cut expenses in order
to qualify for a modification of the mortgage. Cutting back on
expenses could involve selling a seldom used car or dropping high
speed Internet access for awhile until you’re back on your feet.
The more willing you are to work with a lender in order to make a
home loan modification feasible, the better your chances are of
having them agree to modify your loan.
Seek
Professional Help
If
you aren’t able to understand exactly how to qualify for a home
loan modification, you may want to seek professional help. Consulting
with an accountant or an attorney that is familiar with the real
estate and banking industries is a smart move. They will be able to
guide you through the process--if you need to go through with it. A
professional financial advisor may be able to help you come up with a
way to pay off your mortgage without a home loan modification. At the
very least, they should be able to help you identify your
lender--some home loans are ‘sold’ to various debt holders
instead of remaining with a single lender. If your loan is held by a
single lender, such as your local bank, it will be far easier to
modify the loan.
Be
Persistent
If
you hope to get a home loan modification, the old saying of ‘if at
first you don’t succeed, try, try again,’ definitely applies.
Lenders are reluctant to modify home loans for any number of reasons,
not the least of which is that it actually costs them money to redo a
loan. That means it will be up to you to convince them that it’s in
their best interest to give you the modification, because you may
have to default on the loan if they don’t. If they tell you ‘no’
the first time, don’t hesitate to try again at a later date.
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