Learning About Loan Modification: How To Qualify For It
The recession has forced many people to lose their homes, increasing the rate of foreclosure across the country. The United States is currently facing major financial crisis and a severe economic downturn.
Loan modification is becoming increasingly popular in all the states of the country. It is a way to temporarily or permanently change the terms of a mortgage in order to make it feasible and more affordable. Terms may be negotiated with the lenders, and then once the process is complete, a homeowner may enjoy the relief of having to maintain ownership of one of his most important and valuable investments—his home.
Loan modification—how to qualify for it, particularly—is a topic of great interest. Homeowners eagerly research about it in hopes of getting one themselves. Like most financial aid programs, however, it of course, requires certain circumstances, information and documents. There is a need to establish eligibility for it, because if everyone were to qualify for it, then lending companies would find themselves in trouble.
Before going out of the way to negotiate mortgage terms, people must first familiarize themselves with the qualifications of loan modification. It is especially important to consider these three qualifications:
First of all, the borrower’s financial hardship must be evident to the lender, because it is the main reason why current mortgage terms are unaffordable. This financial hardship must be proven, and there are certain circumstances that are considered valid. Examples of such circumstances are divorce or separation, military service, death in the family, sudden unemployment, decreased income, unmanageable medical expenses, debilitating illness, incarceration and job transfer. The loss of equity itself cannot qualify a borrower for loan modification.
Second, a borrower must be able to prove to his lender that in case he is approved for loan modification, he will be able to comply with and maintain the modified mortgage terms and payments. Lenders are not partial to mortgage defaulting. To prove to lenders that there is no risk of defaulting again, a borrower must provide certain required financial statements, both current and one proposed, to show the capability to keep up with the modified terms. Current mortgage payments, property taxes, home insurance and other homeowner dues must be more than 31 percent of the gross monthly income.
The third one is that the borrower must be able to give a complete and accurate loan modification application to lending companies or banks. The information provided for in those applications is what these lenders look at and thoroughly consider. A poorly and inaccurately accomplished one is more than likely to be denied. This fact emphasizes a need to accomplish the necessary paper work well to greatly improve the chances of being approved for mortgage modification.
The home is important to everyone, and necessary measures must be undertaken to save it. Borrowers must keep the vital information about loan modification—how to qualify for –in mind because it is very significant considering of the difficulties many people are facing today.
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