Insider Information – On Getting a Successful Loan Modification (Part 2)

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With any of the yesterday’s options you will need the following items so that the lender can determine your eligible:

• 2 year tax returns
• 2 recent pay stubs
• hardship letter
• 2 most recent bank statements
• proof of insurance
• expenses/income statement

Very Important:  When fax or mailing the required documents put on the top of each sheet attached to the fax or mailed your name, account number, and phone number, so if the documents are miss located it can still be found because the information is at the top of the documents.  Remember, the lender has alot of forms coming through its office and any thing that you can do to make the job easier is a get help to you and the lender.

The documents that the lender is requesting will be used to determine what you can afford; therefore, there are some tips that are necessary for you to improve your chances of qualifying for the loan modification:

*****Tip 1:  Hardship Letter*****

The hardship letter is the key support document for your loan modification case, so it is critical that the following information is conveyed:

• You first want to introduce yourself and your current loan status.
• Next, you will need to state the reasons you no longer can make your monthly mortgage obligations.  The reason can be:

1. Medical – family illness or death
2. Income loss or change – job loss, lowered wages or hours, job change, etc.
3. Business change – increase in expenses or loss of accounts receivable, lower revenues, loss of locations, etc.
4. martial status change – divorce or separation
5. other – increase in household expenses, tax liens, daycare expenses increase or loss, etc.

• Next, describe the effects that the mortgage payment issues has had on your family’s income.  Explain how the increase in the interest rate has put a financial strain on your family.  Use fact, figures, and emotions to convey your case.
• Request that the lender assist in resolving the financial dilemma and thank the lender for its consideration and help.
• Lastly, sign and date your hardship letter.rate or financial strain has had on the family.

******Tip 2: Income/Expenses*********

If your income has decreased do yourself a favor and eliminate luxuries such as, private school tuition, cable, movie night, extra phones, etc.  In other words, take a look at your expense and cut the fat.

If your income fluctuate state that in your income statement.  You may consider a part time job if you need it.

Your objective is to show the lender your willingness to do what is necessary to repay the loan that you have.

*****Tip 3 – Insurance*******

Shop around for insurance.  This can not be stressed enough with your premium being influenced by your now lower credit score it is to your advantage to shop around.  All insurance companies now use a scale rating of A to Z to rate your credit with T to Z being the worse credit and A to D being the best.  What this means is if the foreclosure has been filed then your credit score may have dropped to 350 to 400.  The latter, of course, is rated as a T to Z credit making your insurance premium very high.  Thereby, making shopping around a necessity.

By all means, do not just hop for the lowest premium, but compare the coverages.

Another thing that you can consider is a higher deductible.  The latter lowers the premium.  Therefore, when you get your quotes ask for pricing for $500, $1000, $2500 and even $5000 deductible.

*Quick note:  Unlike auto insurance, the deductible does not have to paid first before the claim can be paid. It is just deducted from the pay out.  However, if the claim is under the deductible amount it will have to be out of pocket.

Still yet, another premium reduction, is lowering the replacement cost.  This alternative is used as a last resource.  It works like this.  Let’s say the replacement cost is $100,000.  You can get 80% of that value or $80,000 if it will pay off the mortgage and give you a down payment to start again if you need to .

Of course, all the alternatives mention here are meant only to be a temporary alternative because it is always important to have maximum coverage on your possession if you can afford it.

If you need further help with your loan modification do not hesitate to contact Serena at Serena@taylorbrownrealestatetalks.com.

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