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Sample Loan Modification Hardship Letter
The loan modification process can be quite intimidating. You have to fill out all kinds of paperwork, negotiate on terms with your lender, as well as write a letter stating hardship. Out of those three main steps, the letter is the most difficult to do on your own. To give you an idea of how your hardship letter should look, here is a sample loan modification hardship letter to give you some guidance:
To Whom It May Concern:
This letter is to formally follow up on my application for loan modification I sent in to you last week. The application states what we had and what we are looking for, but obviously does not go into how exactly we got into the situation we are in now.
There were severe cutbacks at my job in November and I was transferred to a lower paying position in the middle of other people getting laid off. I should be grateful, but the salary I receive in this position is ¾ of what I was previously making. It had gotten to a point where we were pulling from our savings and scraping change to be able to make our mortgage payments and pay the bills. Two months ago our interest rate went up from 7.45% to 10.35% as we have not been able to manage and keep up with our payments since.
I would like to request our interest rate be lowered to anywhere from 7.25% to 8.40%. We feel this is a fair number to both parties. We were always punctual with our payments before my demotion and my wife is due for a raise next month. We are willing to work with you in finding a compromise that we can both agree on.
Sincerely,
Your Name
It’s important to stick to the facts in these letters, and this sample loan modification hardship letter does not veer off from the point: I simply cannot afford the high interest rate in my current situation. Be sure you mention why you are having problems with your payments and make it clear that there is no way for you to be able to manage as you are now.
Also be sure to mention the rate you would like. Your lender doesn’t have time to sift through every application and determine the exact rates they want.
Stating the interest rate you’re looking for gives them even more of a reason to accept you, because you have determined the interest rate you can handle on your own. It also shows that you are worried enough to have done the work to determine your ideal rate. Use this sample loan modification hardship letter as an example and work around it. A good letter can make all the difference.
Why people refinance mortgage loans
First, you have to think about the refinancing plans and ideas/work arounds that mortgage lenders will throw at you in case you want to lower your rates. Lending companies wont give you something “good” without certain qualifications.
So, with that said the next thing you might want to do is really decided if you “need” to refinance your mortgage. A good number people think that refinancing is an easy task simply because they have a built up history with a company. They think hey I’ve spend x amount if years with you so you owe me this in return. Refinancing doesn’t always mean lower rates and people need to get this through their heads before putting all their eggs into one basket (it’s not for everyone)
Now, I’m not saying refinancing isn’t a good option it’s a great idea but it just depends on what type of mortgage you have. That alone will be the main factor that discerns whether or not refinancing is a good option for your personal situation.
There was a time when lending companies needed to do conduct a detailed background check on your properties before lowering your rates but now with the economy the way it is most companies are willing to work with you so they can have your business (take advantage of it).
So ask yourself something (or your spouse). Is it really time to refinance is this something we really need to do? What is your strategy what are you trying to do here?
Perfect example, do you want lower rates so that you can still cash out and pay off other debt or do you need just a basic refinancing plan?
Most common reasons why people want to refinance
1. Better Credit Rating
Most people can’t obtain low interest mortgage so they bear to suffer with elevated rates. There are those that are lucky and get lower rates even with bad credit
Traditionally people try to pay their loans back/on time in hopes of building their credit and this does work but sadly it doesn’t work fast enough for most. Not to mention most can’t afford but to pay the minimum amount due each month.
2. Lower Interest Rate (Pocket Money)
Some people want a better deal in the end they want to cash out in the end and use the access money for other things like paying off other debt, buying a new car…. Etc.
Experts say that getting home equity is the better option (in our current economy) because the rates are cheaper.
For instance, have a loan of $40,000 on a $75,000 home. You consult with your spouse or financial advisor and you come to a conclusion that a lower interest rate is the way to go. Which will allow you to allocate $7,000 to pay off your car loan (7k is just an example figure)
Now that you have a little understanding about the benefits of refinancing loans its time to sit and see where you stand financially and path a way for your future.