6 Mistakes When Applying for a Loan Modification

Loan Modification Mistakes

1. Trying to calculate your income and
expenses while on the phone with the bank.Unfortunately, too many homeowners
don’t take time to accurately calculate their income
and expense and get denied the opportunity to apply
for a modification on the very first phone call.

2. Not giving your lender adequate time to help.Lenders are willing to work with you, up to a point. A big
mistake that borrowers make is not calling the lender until it is
too late. Loan modifications take time. There are lots of
parties involved and levels of bureaucracy that your
application needs to go through. This all takes time. You
should give your lender at least 45 days to complete the
application. Don’t procrastinate – time is your friend.

3. Including overtime income in monthly
income calculations.Lenders will only accept fixed income in determining
your eligibility for a home loan.

4. Not keeping accurate records.Do you remember all the detail and documentation that you
needed to get your first home loan done? Well, loan
modifications are no different. You’re going to need paystubs,
bank accounts, credit card and utility statements; student loan
and car loan balances and monthly payments and more. If you’re not a detail-oriented person things
will fall through the cracks. Your modification will be delayed. A missing piece
of documentation can be the difference between qualifying for
a loan modification and being denied.

5. Being over-optimistic on your new monthly
mortgage payment.This works both ways. You can be too optimistic
about how low your monthly payment can be; but you
can also be too optimistic about how much you can
afford each month in your new payment.

6. Not preparing an accurate and effective hardship
letter. They want to help people who have had a life-changing
event that has made a previously good borrower fall behind on
their mortgage.