Loan Modification Yourself

Doing a loan modification yourself can save you money, but there are also some pitfalls you must be aware of. Before jumping into a loan modification yourself, there are a few important things you must know before applying. Then you can decide if you want to attempt a loan modification yourself, or if you’d prefer to save yourself the headaches, hassles, and risks and let a loan modification company do it for you.

The first step to completing a loan modification yourself is to make sure you have some documentable hardship you can present to your lender, which will justify having the terms of your original mortgage changed. Examples of  “justifiable” hardships are: divorce, death in the family, serious illness, loss of job, reduced income, and relocation. This is incredibly important, and without a documentable hardship it will be almost impossible to obtain a loan modification yourself.

The second step in completing a loan modification yourself is documenting all sources of income. Obviously a lender will not agree to modify your mortgage if it doesn’t make sense financially to do so.

The third step in obtaining a loan modification yourself is figuring out a new loan payment that not only fits your budget, but also fits your lender’s criteria for debt ratio. You must be able to demonstrate that the new terms you are suggesting are affordable for you, and that they also are within your lender’s guidelines for lending money. Each lender has their standard for debt ratio, and for you to complete a loan modification yourself, you must be able to calculate this ratio according to your specific lender’s standards. Otherwise, your application will be denied.

The final step in doing a loan modification yourself is figuring out “disposable income.” This is the money you have left at the end of each month, and it is very important if you want to obtain a loan modification yourself. If the amount is either too high, or too low, your lender will most likely reject your application.

As I mentioned, completing a loan modification yourself could possibly save you money if you do it the correct way and follow the correct procedures. The most important thing is to make sure you have all the required information, and that you’ve properly calculated the new terms in a way that not only benefits you, but gives your lender incentive as well. I know it may seem daunting, but remember, your lender would much rather have you pay off your loan, even if it’s modified, than to put the home into foreclosure, as this is almost a guarantee that they will lose money.

For information and assistance on obtaining a loan modification please click this link.

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Filed under: Mortgage Modification

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