Mortgage Loan Mod: Tips For Getting One

A growing number of foreclosures is having a disastrous effect on attempts to negotiate an economic recovery. Homeowners who have already lost homes number in the hundreds of thousands, with many others in fear of home loss. For those who are in the foreclosure process, there are some things that you can do to help yourself. Here is some information about getting a mortgage loan mod.

Defining a Mortgage Loan Modification

Don’t confuse a mortgage modification with a refinance on your home. The original mortgage loan consists of three components that combine to set the amount of monthly loan payment. The mortgage payment is defined by the principal, length of the loan repayment period and by the rate of interest to be charged. Modification does not require you to go through credit score checks, and other qualifying documentation procedures that would be required by a refinance.

As recently as two to three years ago, many banks and lending companies were making risky, upside-down loans that homeowners could not afford. The loans were too large, may have had variable interest rates and were spread over thirty or more years. A modification of a loan adjusts one or more of these factors so make the monthly mortgage payments affordable to the homeowner.

Qualifying for a Loan Modification

The first requirement is that you must have a real reason for your inability to cover the existing mortgage payment. Serious illness or death in the family is one reason, as the loss of a job by one or more individuals who contribute to the household income.

The mortgage payment must be more than 30 percent of your income to be eligible. Some modifications have been approved with percentages as high as 79 percent. The original mortgage can’t have been issued less than nine months previously. Perhaps more importantly, the modified mortgage monthly amount must be at a level that can be maintained in the future.

Lender Actions

Banks have been directed to make every effort to modify monthly mortgage payments in an effort to prevent the increasing level of homeowners from losing their homes. The housing market has deteriorated as the inventory of unsold homes increased drastically. Some speculators have purchased homes in foreclosure for just pennies on the dollar. Lenders are urged to modify terms to reduce the monthly payment account.

Face Up to the Problem

Embarrassment and inaction are not the way to get a loan modification in process. Economic factors that are nationwide can be blamed for foreclosure woes. Individually you are not to blame, except if you do nothing to solve the problem.

Completing a mortgage loan mod application is not a difficult or a time-consuming process. You should contact your lender with needed information such as the amount and terms of the original mortgage, a projected income level and expense itemization that will show you can handle the lowered payment.

Learn about President Obamas mortgage plan today! You can end foreclosure with a home loan modification easy and fast, when you follow a few simple steps.