How to Qualify for Loan Modification

This article is posted under Personal finance

Obama’s “make home affordable” program is aimed at assisting those who are having difficulties in meeting their mortgage payments through loan modification.  If you are thinking of applying for a loan modification, seeking the help of a financial counselor is a good way to start.  Sometimes, you can even avail of free counseling services.  Counselors will help you decide if a loan modification is your best option, and help you qualify for it.

Wondering on how to qualify for loan modification?  Here is a step-by-step guide to qualify for one:

Step #1:  Take the initiative.
Contact your bank or lender and ask how to go about the application for a loan modification.

Step #2:  Pass the interview.
Anticipate that there would be an initial screening before you will be asked to submit documentary requirements for review, such as the foreclosure hardship letter.

Step #3:  Assert valid hardships or reasons why the lenders should allow a loan modification.
Reasons like disqualification for refinance, having no equity in home, about to go into foreclosure, unemployment during tough economic times, and the like are acceptable.  If you’re experiencing any of these situations, most likely you will be qualified for the loan modification.

Step #4:  Convince the bank or lender that the loan modification is also for their advantage.
Initially, banks or lenders will incur financial losses when approving loan modifications so you should persuade them to consider the long term gains.

Step #5:  Show proof that your income is not enough to pay for your current mortgage.This should work even if some documents show that you make up-to-date payments.

Important application requirements and factors for approval

Of course, your application should be backed up with documents for your lenders to process your application.  Some of the paperwork you might need to furnish are the following: tax return, 2 months of bank statements, a P & L statement (if you have your own business), and hardship letter.  Keep in mind that you should be persistent in your application.  You must consistently follow up its status and make sure that the bank or lender receives the requirements you submitted.

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