How Do I Qualify For a Loan Modification?

It is in the banks’ best interest to award loan modifications to eligible homeowners. The big question our readers are asking us is, how do I know if I qualify for a loan modification?

We’ve put together the most common requirements for a loan modification, please use this as a guide to weigh your chances of receiving a loan modification.

Loan Modification Qualifications

Homeowners who have experienced a hardship.

A hardship can be anything that affects your ability to pay your mortgage. Did you lose your job? Did your spouse lose her job? Did you get a reduction in pay? Did your adjustable rate mortgage increase your costs? You will need to prepare a letter to the bank showing your hardship, so be sure to keep any documentation you may have.

Borrowers in an adjustable rate mortgage falling behind in their payments.

Adjustable rate mortgages pose the highest risks for mortgage foreclosure. Mortgage payments can double, making it nearly impossible for homeowners to afford their mortgage payments. In situations like these, it’s essential that you act quickly, because it’s very easy to fall behind on your mortgage.

Mortgage rates above 8%.

This is considered a very high risk situation, that the banks are supposed to act on. If you are paying more than 8% interest rates on your mortgage, contact your lender or a specialist immediately, because you are very likely to receive a loan modification.

Homeowners that are unable to refinance their mortgages.

Not being able to refinance your mortgage is another risk for the banks and a risk factor for foreclosure. Keep any documentation of your failed refinance applications, and have them ready to be sent in with your hardship letter.

Homeowners that are upside down in their home value.

Owing more than your home is worth is another huge risk factor for foreclosure. This means you have more to gain by walking away from your home than staying in it, so banks want to ensure you keep paying your mortgage and they don’t foreclose on your home.