There are a number of life circumstances that can take a toll on your daily life and your finances. As a homeowner, a death in the family, illness, or loss of a job can vastly impact your ability to afford your monthly mortgage payments. If you find yourself falling behind, it may be possible for you to modify your home loan in order to avoid foreclosure. With a loan modification, you will essentially be restructuring your original loan in order to have more affordable payments.
Here are a few things you need to know before modifying your loan due to financial hardship:
What Are the Requirements?
Not everyone is able to restructure their loan. Your lender will need to agree with the modification and will generally use the following criteria:
• You need to demonstrate that you cannot make your current payment due to financial hardship
• You are unable to refinance the loan
• Your debt-to-income ratio has increased.
If your lender decides to modify your loan, you will still need to go through a trial period in order to show that you can afford the new monthly payments. Keep in mind that lenders want you to be able to replay your loans.
Providing Financial Proof of Hardship
Financial proof is needed for your lender to modify your loan due to financial hardship. Therefore, make sure to gather the following documents.
• Recent federal and state tack returns
• Bank Statements
• Pay Stubs
• All information pertaining to your loan
• A Letter of Financial Hardship
Keep in mind that you must write this letter to your lender in order to explain your situation.
Beware of Loan Modification Scams
If you need to modify your loan, we recommend that you go directly with your lender and avoid using the services of loan modification companies. Not only is it often cheaper and faster to handle the process yourself, but many of these companies charge high fees to do things you could have easily done yourself (e.g., mail paperwork).
If you do not understand anything about the loan modification process, your lender will be more than happy to answer your questions and get you the help you need.
If you need help with your mortgage, contact CitiSky Home Loans today!