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Loan modification may seem like a pretty simple process, but there are a few tips to get it right. Loan modifications are denied and delayed everyday making it important to know what to do to get it right. You must be proactive to get your modification approved.
When you are asking for a loan modification, the lender will ask you to complete a basic application. It might take some time to complete, but in many cases, the lender has specified a due date. Take the time to be sure to meet all deadlines so that your lender reviews your documents in a timely fashion.
The Hardship Letter
You will be asked to provide the lender with a hardship letter. They will ask you to list the reasons for the modification as well as what personal problems have led you to financial difficulties. For example, if you have been hit with a loss of income from divorce or job loss, these are things that need to be outlined in the letter.
The letter should also include dates that coincide with your inability to make your mortgage payments. Making an accurate timeline helps the bank see why problems have arisen.
Also, be sure to tell them what you are currently doing in order to make the situation better and ask for a lower payment to help you get on your feet. For example, you can stress that you have taken on a second job or cut most expenses.
By putting all three of these into your letter you will create a letter that can appeal to the lender and let them know that you will truly do what it takes to stay in your home.
The Budget Worksheet
A budget worksheet tells the lender what your debt-to-income ratios are. They use the worksheets to determine your new payment. They do not want to overburden you with a loan that will not fulfill your needs and do not want to supply you with a loan that will be damaging to their bottom line.
Fill out the worksheet truthfully and do not overstate the debt that you might have. If your debt is too high, you may become a liability because the bank might see that you cannot support the payment.
In short, make sure that you fill out the required paperwork and turn it in on time to the lender. Take the time to make your hardship letter state all of the facts and reasons for the modification as well as what you might be doing to try and save your home. The budget worksheet is important and should not be over or understated. All of these factors play into successful loan modification.
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