Have you suffered a financial hardship and are looking to start the process of saving your home. The list below shows you the most common hardships people face. If you have suffered one of these hardships then there is a real opportunity for you to potentially qualify for a loan modification.
Have You Have Suffered Some Sort Of Hardship?
Here’s a list of hardships that get approved:
- Marital Difficulties
- Property Problems
- Reduction of Income
- Excessive Obligations
- Employment Transfer
- Unemployment
- Death/Illness of Mortgagor
- Death of a Family Member
- Inability to Rent
- Inability to Sell
- Military Service
- Business Failure
- Reduction of Income
- Fraud
- Payment Adjustment
- Payment Dispute
Any one, or a combination, of these hardships will satisfy the second part of the qualification process for becoming a good candidate for a Loan Modification.
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Your Debt to Income Ratio
When lenders make a decision as to whether or not they’ll offer you a loan modification, they look at your “Debt-To-Income Ratio.” To find this amount, take the amount of your total debt and housing expenses and divide it by your gross Income (if your spouse works, you add both incomes). Then, multiply this answer by 100.
In your total debt, include minimum payments on credit cards, car payments, store credit cards, your mortgage payment, property taxes and insurance. Do not include bills for such things as utilities, groceries, cable TV and telephone. Use the forms that have been included in the package to help you.
Debt to income ratio = Total Monthly Debt Expense / Gross Monthly Income x 100
If you arrive at a figure which is above 50%, then you’ve met the third part of the qualification process.
The last part of the qualification is to replace your old payment, with your desired payment, and recalculate your Debt to income ratio. If this figure is at or below 50%, then you should meet the lender’s last criteria for a Loan Modification. Before the lender agrees on a loan modification, they need to make sure you can honor the agreement.
You must demonstrate that all your monthly debt payments, including the proposed mortgage payment you’re requesting, the property tax and insurance, are each at a level you can still afford.
Lenders hate completing a whole loan modification exercise only to discover that the borrower will default, because the new payment is still too high. So, if your new calculations end up above 50%, you’ll need to rethink your figures or you may not qualify for a loan modification after all.
But don’t panic! There are some other resources you may be able to use:
• maybe you have a 401K you could tap into
• use an existing line of credit
• ask a family member for a loan
Discuss any of these three options with an accountant or lawyer.
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