The Role of DTIR in Loan Modification Programs
The trend got to an all time high, some patterns can now be seen. Before, people did not know what the calculations the Banks and lenders used in order to asses and approve loan modification programs for those in danger of foreclosure.
So what should a person’s DTIR be in order to be approved for a loan rate modification? Well, basically the optimum debt to income ration percentage is from 31 to 40 percent. What your lender basically does is compute your income versus your various daily expenses. The computed income is not net but is calculated as gross income. If it so happens that at least one third of the income a person gets monthly is spent on unavoidable expenses such as food, clothes, utilities, and mortgage payments, then your loan modification will have a high chance for approval.
In order to compute for an accurate debt to income ratio, the lender will have to get the debtor’s complete monthly budget/expenditure in an itemized format. Such entries as gas, credit card payments, medical bills, food, and others should be listed down. Current pay slips and Tax return slips will be required of the debtor in order to validate the stated income. One can usually dabble with the calculations beforehand so that a general idea can be formed of whether or not the loan modification programs application will be accepted.
One should first remember an important fact about the qualifications for the loan rate modification process: do not overestimate your expenses listed for the debt to income ration. This is such common error that a lot of people do. First of all, the banks and lenders know what the sensible budgets are. Secondly, even if the number is believable, the lender might just deny the application for modification if the DTIR is too high. This is because a high DTIR would mean that the homeowner will just not be able to pay off the loan even if the it has been modified. Remember that even if it is modified to such a degree that the payments are considerably lower than before, the fact is that the homeowner will still need to pay off this new one. If the homeowner still won’t be able to pay the newly modified loan, then the lender loses time and money in the modification process.
People can actually do a loan modification without the help of a lawyer. Doing it yourself can seem a bit frustrating since one will inevitably have to do tons and tons of studying and research about the subject, but if you want to avoid paying for professional help then this is for you. On the other hand, there are a lot of companies and nonprofit organizations that offer professional help with loan modification programs. But, since you already know the basics of the process and the importance of the DTIR then all that is left is to read up on the process so that you can do it yourself.
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