It can be scary when your home is on the line and you need to ask your bank for help. A loan modification could provide you with a lower payment and help you to keep your home. So, if you know some of the important approval guidelines then you will be better equipped to provide your bank with the information they need from you in order to approve your application.
Just as importantly, you need to know what causes a loan modification to be turned down and why some homeowners are approved while others-while also deserving-are denied. It's not magic or rocket science, but there is an actual formula that bank use when determining which homeowners qualify for one of the federal loan workout plans. Especially the stimulus plan called HAMP-this program offers standard guidelines for approval-so it just makes sense to learn those guidelines and be prepared to fine tune your application accordingly.
What will cause a loan modification application to be turned down? Here are a few pitfalls to avoid:
Do not overstate or understate your income. Everything you put on your financial statement must be proven. So, if you have income that is paid in cash, make sure you deposit that into your bank account so that you have a paper trail to prove it. Accurately account for your monthly bills-the bank will check your debts by pulling a credit report so be sure you include everything that will show up. Only show the minimum payments due on your credit cards-even if you sometimes make a bigger payment. Work on your financial statement before you call your bank-you need to have the chance to fine tune your numbers and be certain that your application demonstrates your ability to afford the new modified payment. You want to get it right the first time-so taking the time to prepare your application ahead of time can be the difference between approval and denial!
A loan modification can be turned down for many reasons, and some of those reasons are out of your control. Remember, your bank will always choose the option that will save them the most money. So, if they can lose less money by foreclosing instead of modifying your loan, that is what they will do.
Homeowners can increase their chances of a successful loan modification by doing their best to prepare an accurate, acceptable and complete application. This means that your debt ratio, new target payment, disposable income and the other qualifying triggers have been calculated ahead of time to prove in black and white that you meet the guidelines. This calculation may be confusing if you have not done it before, so you may want to use a software program designed just to help homeowners.
You can avoid the pitfalls of loan modification denial by using the Loan Mod Quick App software to make certain that your figures are accurate. Also, you will see immediately if you need to make any adjustments to your budget in order to qualify-before your bank has the chance to turn it down. If you know the guidelines, use those same guidelines and prepare your loan modification application correctly, you have a good chance of success.
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