parag | Uncategorized | October 14th, 2010 | No Comments »
Thousands of American homeowners are in desperate need of availing loan modification plan to avoid foreclosure and continue living in their house. Loan modification is an effective attempt of improving your financial conditions. A variety of options are available for people willing to get their loan modified. The lending institutes who offer such services have devised special plans which will fit to everyone’s situation. The only thing required from the borrower’s side is that they should complete all the documents which are required to get approval through an appropriate loan modification provider. Out of all documents required, lenders are typically interested in the debt ratio and the hardship letter with a proof of income statement describing your inability to pay the monthly payments.
Guidelines for debt ratio
The debt ratio i.e. income to expense ratio of 31% or more is desirable for the new mortgage modification to be active under the federal stimulus modification plan. You should calculate your debt ratio prior to application and thus increase your chances of getting approved for the loan modification program. This can help you to ensure that you qualify with this particular guideline. This will also help you plan out your monthly financial budgets accordingly and indicate any important adjustments required, so that you could have enough not reusable income to prove that you are able to do the monthly payments after the loan modification is been incorporated.
Guidelines for financial hardships letter
In order to get qualified for Obama’s federal modification program, you need to produce a hardship’s letter mentioning the hardships faced to the lending institute before getting the loan modification. Running out of enough liquid is too lame a reason for approval. Following are the hardship guidelines that are generally accepted.
- Loss of income due to loss of job or due to increase in monthly expenses.
- Separation from your spouse. The property might be jointly owned, thus it requires modification so as to sort out who will pay how much money.
- If you are actively serving the military services.
- Misfortunes like death of a earning member of the family or any co-borrower. This requires modification in loan as the complete burden of repayment is levied on the shoulder of a single person.
- Increase in expenses to long lasted medical problem or any severe disease. This incurs too much expenses and it may be the reason for loan modification.
- Loss happened due to natural calamities like flood, earth quake. These kinds of mishaps cause a need for modifying the mortgage loan payments terms.
Thus before availing a mortgage loan modification, the entire loan modification process should be completely understood which can make you qualifying for the loan modification easier. It is advisable to consult a good service provider who’s experienced and expert attorneys can guide you through the whole process.