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Home Loan Modification : A way to save your home from Foreclosure
As economy is still in sinking mode and has hit many Jobs, in result of which people are not able to pay for their mortgage and their houses are being foreclosed. So many people are looking for an option to lower down their monthly mortgage to save their houses.
Loan Modification Program or Home Affordable Modification Program(HAMP) is a process by which you can extend your loan period and can reduce your monthly payment to save your home from being foreclosed. A home loan modification works much like a mortgage refinance in that you try to find more affordable mortgage payment for your financial situation. It is also known as modified refinance. The main difference between refinance and modified loan is that instead of looking for a "new" loan you will just simply "modify" the terms of you existing mortgage loan.
Why you should apply for modified loan and not refinance?
When you go for refinance, it’s not necessarily that your monthly payment will come down. As numbers of homeowners has increased in past times so its sometimes not possible to lower your monthly mortgage. So in that case affordable loan modification is better option to choose if you are not able to pay your monthly mortgage or having trouble managing your finances.
Eligibility For Loan Modification
The approval of Loan modification program depends upon you bank from whom you are taking the loan and making payments to. Otherwise there’s list of things that you have to qualify. You are eligible :
- If you have Documented form of your financial situation that it has changed in past times.
- If you have missed 3 payments or more.
- If you are the primary owner of the property.
- If you havn’t filed bankruptsy yet.
As different lenders works differently with this program. So you have to consult your lender and make him aware of your hardships.
Required documents for applying:
There are few documents that lender may need in order to provide you the benefits of Loan Modification. These documents may vary with different lenders but the critical elements are typically the same. Your loan modification package is going to be the most important part of your mortgage modification efforts. Here is an example of the documents you will probably require:
- A letter documenting and explaining your financial up-downs.
- Proof of current income and capability to make modified loan payment
- Detailed monthly expense report or budget
The principal purpose of the loan modification package is to provide your lender with sufficient documentation to evaluate the risk in modifying your mortgage.
The most prevalent loan modification programs and resources:
- Obama’s Loan Modification Plan
- IndyMac Federal Bank Loan Modification Program
- FDIC Loan Modification Program
