Loan Modification Steps

Loan Modification Steps

15.06.2010 | Author: mexican | Posted in Mortgage-Refinance

Getting the loan modification steps right can help you determine pre-qualification for a modifying loan and increase your chances of success. In this short article I’ll outline the steps in determining whether are not you qualify and give you one important tip about getting approved. Let’s get started…

  • Step 1 – Work out Your Borrowers Monthly Payment Ratio

    • If your borrowers’ monthly mortgage payment ration exceeds 31% then you are on your way to qualification. To work this out simply divide your gross monthly income by your current monthly mortgage payments. Be sure to include in the mortgage payments any property taxes and homeowners insurance that is applicable to you.

  • Step 2 – Calculate Potential Repayment Rate

    • Work out you may potential have to repay each month by multiplying your monthly gross income by 31% less homeowners insurance and monthly property taxes. The figure you get will be a rough estimate of what you will repay each month with a modifying loan.

  • Step 3 – Work out Monthly Principal and Interest Amounts

    • Of all the loan modification steps this one is the trickiest so please stick with me on this one. To work out your monthly principal and interest amount you’ll need extend the loan term from its present one to 40 years and defer the principal amount to no lower than 100% of the current loan value. Told you it was tricky but at least you only have to do it once.

  • Step 4 – Assess Your Monthly Expenses against new Repayment Figure

    • There is no need applying for a modifying loan if you can’t make the new monthly payments. Doing so is sure recipe for being foreclosed, and I am sure you don’t want that. Before you go forward with a loan application do a thorough dig into your monthly expense.

    The loan modification steps outlined above are the same used by lenders to determine whether you qualify for a loan. They also use a few more guidelines and benchmarks but on the whole these are the main ones. Now doing the above on your own, whilst possible is not advisable. You are better off contacting a loan modification company, which will make a more professional appraisal of your chances.

    Most can be found online and offer a free consultation. They have lots of fancy experts and software to all the calculations in a snap. Take action today and good luck in getting your modifying loan.

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