One of the questions I get a lot in today’s Central New Jersey Housing Market is should I go for a home loan mortgage modification to lower my payments? The loan modification process is often confusing for owners. While most people will buy a home using a traditional mortgage several times in their life, most people only approach a loan modification once or twice. With that in mind I have come up with the following list of three things you need to do to make sure your loan modification goes through without a hitch.
1. Get all the paperwork together before you start the process. Far and away the most basic mistake people make is thinking they can just get each piece of per as they go along. Every mortgage company has a strict set of requirements for how they work with home owners. Ask them what they need before submitting your application but across the board they will need the following:
a. You’ll need to provide proof of income. Obviously they need to know how you are going to make future payments.
b. Tax returns. Are you in debt to Uncle Sam? Are you reporting the income you claim? Are you showing any dependents? These are questions you will need to answer before they will approve your loan modification.
c. Hardship letter. Basically you already have a contract with the bank and are asking for better terms. There has to be some reason they should grant you new loan terms. A hardship letter can describe your current situation such as a job loss, death in the family, health issues, etc.
Be as complete as possible. Organization is the key to your application. Label each document and number the pages if necessary. Neatness counts. These days loan modification companies receive thousands of pieces of paper. Most of these come in via fax that can be searched by the company so it makes a difference if the scanner can read what you are sending to them.
2. Be honest and upfront about your situation. Some people are ashamed to say they need help from their loan company. Don’t be one of those people. You are not alone. Like I said there are thousands of pieces of paper from all across the country being sent in. You are not the only one with the need to modify a loan. If the company you’re working with needs more information, provide it.
3. Be flexible. Many people think that every loan modification is the same. You may be able to get one program and not another. Some programs have very strict guidelines (HAMP – Housing Affordable Modification Program cannot be negotiated for instance) while many local lenders can create a custom package for you to make certain your goals are met. Make sure you know what your objective is before you start out. There are costs involved which may make any program a negative for you but for the most part banks are looking to keep you as a customer.
If you have questions about the home loan modification process we have not covered here, please drop us an email with the word MODIFICATION in the subject line or call us at 732-302-1771.