If you are underwater on your house, if your mortgage payments are suddenly too high, or if a financial crisis has rendered it difficult for you to pay down your home loan, you may need a home loan modification. Modifying your home loan can have a number of unexpected road blocks, twists and turns. Consult with a loan modification lawyer or specialist before you make the decision to apply, and be sure to keep the following things in mind.
- Not Everyone Qualifies For A Home Loan Modification – You need to be able to prove financial hardship if you want to modify your loan terms. Proof of financial hardship is difficult unless you’ve lost your job or taken a pay cut, incurred significant medical expenses or had some similar devastating event. “Rising food and gas prices,” while they do cause financial hardship, are not necessarily accepted as valid reasons.
- Consider Federal Assistance – If you are truly behind on your mortgage and need substantial modifications just to avoid going into foreclosure, you may need to seek federal assistance. Consult with your lawyer for information on how to receive help from the government.
- Mortgage Modification Takes Time – In the best of scenarios, it will take between 1-3 months for your mortgage modification to go through. In the worst case, it can take as long as half a year. Therefore, you shouldn’t expect to be saved immediately if your mortgage payments are too high. If you think there will be trouble a few months down the line, begin mortgage modification proceedings today.
- Stay Current On All Payments – While you may think that you need to be doing poorly to qualify for a substantial home loan modification, it is actually more common for people with semi-decent credit scores to have their loans modified. The reason for this is that it proves that you are financially responsible and still an asset to the bank. If you don’t pay your mortgage or credit cards, your lender may just opt to deny your modification request, foreclose on your house and cut their losses.
- Keep Your Necessary Documentation Handy – Home loan modification is one of the more paperwork-heavy financial processes you can take. You will need: a hardship letter, current and projected financial statements, home valuations, proof of financial hardship, federal tax returns and W-2s for the past two years, and pay stubs and bank statements for the past two months.
Your Lawyer Knows Best
All of the above issues are important, but a loan modification attorney can provide more in-depth advice about your particular situation. Every home loan modification is different, and every situation has its own issues. Don’t rely on your lender to give you the full story. Contact a lawyer today for help with your home loan.