How Do I Qualify for a Loan Modification?

dghtdhKnowing whether you would qualify for a mortgage loan modification or not can be tough. However, some guidelines can give you a proper idea on how to ensure your chances of success in this regard.

Sufficient financial hardship

The loss of a job, reduced income due to changing circumstances, a serious illness involving huge medical bills, a divorcing situation for a couple and excessive debt could create serious financial hardships. No matter what the case is, you will have to show an enduring situation. You also need to remember that there are less chances of it to improve significantly in the near future. Moreover, the financial hardship needs to be combined with a situation with no significant cash reserves because a good cash reserve implies your ability to continue with your mortgage pay-outs.

Convincing your inability to meet the existing mortgage pay-outs

Even if you are in a financial stress, you may not qualify for a loan modification if the assessment done by the bank suggests that you have options for meeting your payment commitments. Some lenders would qualify you for loan modification only after you default in repayment. A perception that you are living beyond your known means is a sure red flag. In that situation, it becomes compulsory to take help from a loan modification expert.

Ability to honor a modified pay-out schedule

The whole purpose of loan modification from the perspective of lenders is to ensure that the chances of the loan getting fully paid is higher, despite the financial hardship faced by the borrower. So the lenders will not go for it if there are greater chances of you defaulting even on the modified terms. The lenders will look for your income documents, tax returns and bank statements. They would qualify you for loan modification only if they are satisfied with your ability to meet the revised commitments. A loan modification firm can help you reduce stress and increase the probability of getting loan modification to a great extent.

Primary residence 

For many lenders, they have to be living in their properties under consideration in order to be qualified for a  loan modification.