Tag Archives: lenders
Loan Modification – How To Qualify
A loan modification refers to the process by which your bank grants you a permanent or temporary adjustment to the conditions and terms of your mortgage. These adjustments are aimed at making your payments more affordable in accordance with the regulations of your financial situation, and they can involve longer loan term periods, the reduction of the principal, or the granting of a lower interest rate. These measures can prove instrumental in avoiding foreclosure on your home. In order to apply for this process, you must find out if you qualify for a loan modification.
You need to determine if you meet the required qualifications relevant to a modification. Lenders have their own qualification guidelines. Whilst similar, these guidelines can vary from lender to lender.
The following are guidelines that banks use in evaluating the eligibility of your loan for modification:
Front-end debt-to-income ratio
The front-end debt-to-income ratio is utilized by lenders in determining the amount of your gross income (not net income) that is directed toward your house payment on a monthly basis. They combine the costs of housing expenses, interest, taxes, and other relevant and important factors in determining your debt ratio. The lender calculates the front-end debt-to-income ratio before the modification process is started, along with what it would be after the application has been processed. Before the modification, this ratio needs to be above 31% in order for you to be eligible. As a result of the modification, the ratio needs to be lowered as follows:
1. For private loan modification programs, an acceptable debt-to-income ratio is typically between 31% and 42%.
2. For HAMP loan modifications, the guideline is to lower the debt-to-income ratio between 31% to 38%.
It is important for homeowners to understand that this is an important criteria for approval.
Modification agreement
This agreement provides homeowners with a lower monthly mortgage payment which helps reduce their debt-to-income ratio to an acceptable level, as outlined above. Before you are granted a permanent modification, you will be given a three-month trial loan modification (a.k.a trial payment period, or TPP). During this period, it is critical that you make your payment on time or you won’t be offered a permanent loan modification. You may need to fine-tune your budget and eliminate unnecessary expenses in order to afford your new mortgage payment.
Although you should be well aware of your debts and expenses, you should not need to become a financial analyst in order to understand how all these ratios work together. It’s advisable to seek some expert help in trying to make sense of your budget before and after the modification process.
Do your research
In order to qualify for a loan modification you need to educate yourself about the process. Initially, the process can be intimidating to homeowners, but with some careful research you will discover it to be less daunting than you might expect. Educate yourself regarding the lending requirements of your bank while thoroughly completing all the necessary forms. This will increase your chances of approval.
Seeking outside help while working directly with your lenders
You may choose to work with your bank directly. However, informing yourself about the process may help you avoid unnecessary difficulties along the way. Additionally, if you want to obtain some assistance, secure help that is inexpensive and conflict-free.
Presenting professionally prepared paperwork
Your application package and the associated paperwork must be acceptable to the bank. Ensure that you have filled out all the required forms. Don’t forget to include a letter that describes your financial difficulties in detail. Use language that is grammatically correct in order to convey a respectful and professional attitude.
Conclusion
Take the necessary time to be properly prepared before you begin the loan modification process. After all, this is your precious home that you are trying to save. You will discover that once you become familiar with the ins and outs of this process, you will be able to determine whether or not this program is suited to you.
For more information on loan modification programs, please visit
How to Get the Best Home Loan Possible
You deserve only the best home loan deal. Here are some tips to help you get the best mortgage deal possible.
Mortgages are not created equal. The home loan industry is thriving these days, with lenders offering various types to fit different financial circumstances and needs. The competition in the industry is just as tight that lenders are in the lookout for potential borrowers who would like to get a mortgage.
If you have looked around online for good mortgage deals and have signed up for a few sites, do not be surprised to receive email offers almost immediately after signing up. What you should look for is the best home loan deal that you can get given your circumstances. You wouldn’t want to pay higher rates or pay unwanted fees. But even if this is the case, be very wary about the oh-so-attractive loan offers you see in the mail. Use your instincts, be a smart borrower, and get the best deal you can possibly get. Here are some steps to help you find the best deal:
Know your credit rating and your credit score. Many people are not aware of the fact that their credit standing has a good bearing on their home loan deal. It is a good idea to get a copy of your credit standing as it can be a useful tool in negotiating for the best loan so that you do not end up paying more than you should. If you have credit report mistakes, immediately correct them before applying for your loan.
Be careful when using your home equity to consolidate debts. Though debt consolidation is almost always a good idea, doing so against your home can pose bigger risk. This type of loan may be useful but missing out on your repayment may get you at a higher risk for foreclosure.
Shop around for a good deal. There is no harm in shopping around for a good deal. You can contact three or four potential lenders, ask pertinent information, and then compare their home loan offers. What you should look for is the lender which can offer you the best interest rate, loan term and those which can provide you with the excellent service you deserve. You should also pay close attention to closing costs and fees that they charge. Remember that you should never base your decision only on monthly payments. Some companies do charge low monthly fees but impose hidden fees or balloon payments which can either cost you more in the long run or will be difficult for you to pay in due time. Also, be very wary of those who will ask you to pay upfront fees before actual negotiations have been talked about.
Close your deal with caution. Once you have chosen the lender and the type of deal you think is best, make sure that you read all the home loan papers before signing them. Make sure that you understand everything written and that what is reflected in writing is the actual deal you talked about. Be careful of lenders who will rush you into signing. If in doubt, do not sign the home loan deal!