Mortgage loan modification – How to alleviate your trouble
If you have fallen under tough economic times due to some financial hardships like loss of a job, medical emergencies and so on, you can opt for mortgage loan modification to stand on your feet again. In a mortgage loan modification program you can negotiate with your lender to restructure the mortgage loan and make if more affordable and manageable so that you can be current on your mortgage loan. This may help you in avoiding foreclosure on your home. However, you have to show that you have a source of income so that you can remain current on your mortgage loan.. Discussed below are measures you would need to take to apply for loan modification.
How can you be eligible for loan modification?
The reasons for which a mortgage loan modification will be granted to you can vary from lender to lender but most of them have some basic criteria. The eligibility criteria are:
Financial hardship - If you have faced a derogatory change in financial circumstances or have faced any documented hardships.
Delinquency - If you have missed three consecutive payments, that is, delinquent by ninety days.
Primary residence - If you own the property as a primary residence.
Bankruptcy filing - If you haven’t filed for bankruptcy.
What do you have to show to your lender?
You have to show your mortgage lender or the bank that the loan modification program you are opting for is of best interest to the organization. The bank being a business institution, would aim at returning profits to its shareholders. Hence, they would only accept your offer if you can place your case in the best possible manner. To support your modification request, you need to show the following to the bank:
There has been a material change in your financial circumstances.
There has been complete effort from your side to make your mortgage payments.
The loan modification you are applying for should not be because you are defaulting purposefully to get a loan modification.
Since the bank is offering you new terms on the loan after suffering an initial loss, you need to work hard to convince them that you will be able to repay the new one on time.
You should keep in mind that mortgage loan modification is not the same as refinancing. In a refinancing you opt for a new loan with which you pay the old one but in loan modification you change the terms and conditions of the existing loan in order to be current on it.
