| A fresh start loan modification |
Loan modification is a fresh start for borrowers who are caught deep in the financial trouble. With loan modification the borrowers can get their loan modified to bring down the mortgage amounts to an affordable level. The terms of the mortgage can be modified for resetting of the interest rate, principal readjustment or payment deferment. Depending on their specific situation the borrowers can get a low interest rate which can be fixed for rest of the loan term. Loan modification can also help the borrowers to get rid of negative amortization.
Loan modification is free of cost for eligible borrowers and is one of the best alternatives available to the borrowers to save their homes and themselves from the embarrassment of foreclosure.
Though at the face of it loan modification may appear to be a complex process, if understood properly loan modification can be the saving grace of millions American homeowners caught in the turmoil of economic slowdown. Federal government is backing up the lenders to extend loan modification as an option to troubled home loan borrowers. The broad eligibility criterion's for applying to loan modification program are as follows:
•The loan should be held and serviced by the bank from which the home loan modification is sought.
•The debt to income ratio of the borrower is more than 31%. The modified mortgage payments are targeted to be around one third of the gross monthly income.
•The loan modification is allowed only for the first mortgages by the borrower.
•The property on which loan modification is sought by the borrower should be the primary residence of the borrower. This is to discourage the owners seeking home loan modification on properties for investment purpose.
•The interest rate cannot be reduced to less than 2%.
The process of loan modification takes into account various factors such the current financial condition of the borrower and his ability to sustain the modified payments. The process of loan modification is:
•Preparing income and expenses statements: Chalk out the mortgage amount that you will be able to spare towards the payment of the loan after taking care of your expenses. Draw up an income and expenses statement. The income statement consists of pay stubs and tax returns. For the expense statement, collect all the bills paid or unpaid, credit card statements, insurance payments, student loans, medical bills and your utilities bill and all other expenses that you are currently or likely to incur in a month. Fill up the paperwork required by the bank in all earnestness. The documents have to be accompanied with a well drafted financial hardship letter.
•After the submission, follow-up with the concerned department periodically to check on the status of your application.
Millions of American home owners are realizing their dream of a home through loan modification program. Make a fresh start with Loan modification and putting your debt burden behind you.
For expert financial advise and information about a home loan modification - visit my simple loan modification guide at: http://loan-mortgage-modification.net/
Article Source: UnArchived Articles
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