The Basics of a Mortgage Modification Loan

With the unstable and unpredictable housing market these days, most homeowners have become quite familiar with the term “mortgage modification loan.” You must have heard it before yourself, but you may not be sure what it actually implies. A modification loan is what homeowners turn to when they are having trouble paying their mortgage as they should. But you may wonder this: why would anyone want to get an additional loan when they are already having trouble meeting their current financial obligations?

Although the phrase may make you think a certain way, a mortgage modification loan is not exactly a loan. It is actually an adjustment to your existing home loan. This means that instead of getting a new loan, the terms of your current mortgage are modified to ensure that your monthly payments are easily affordable.

You may now be more interested in the idea of ​​a mortgage modification loan. You should find out if it is possible for your lender to give you a loan adjustment. The easiest way to identify if you are eligible for an adjustment on your existing mortgage is to ask the bank’s loss mitigation specialists.

Each mortgage lender has different eligibility criteria, but almost all consider the date the loan was originated, the amount of principal left in the loan, as well as the percentage of your monthly income that goes toward your mortgage payment each month. . If his position falls within these parameters, then he is qualified for a loan modification.

If you find out that you are eligible for a modification, the next step is to submit a formal request. You must obtain an application and submit it along with the required documentation that presents your financial information. The lender will give you a checklist of all the documents you will need to submit to verify the information. The most commonly required forms are invoices, bank statements, pay stubs, tax returns, income verification, etc.

Another thing you will need to do is write a hardship letter, which is a small number of pages devoted to why you are now having trouble paying your current mortgage. You should be sure to give details when mentioning a specific event, such as losing your job, injury, illness, or any similar crisis.