Not more than a year ago the word ‘modification’ sounded scary and complicated. Homeowners had only heard of these words from attorneys or loss mitigation companies. Although sometimes they can be helpful if your situation is complicated (or you don’t have a little time to invest), many times it’s simply not necessary to spend thousands hiring a professional. A little knowledge from a good Do It Yourself Guide is all you need.
As banks begin to change and adapt to the situation that homeowners are now facing, they are learning to embrace the concept (and willingness) of offering loan modifications to their customers. In fact, many Banks prefer you don’t use modification companies at all. Chase, one of the largest banks, is an example of this. When you call their main mortgage customer help number, they have an outgoing message ‘warning of the use of 3rd parties modification services’. The message goes on the say that they do not charge money to complete a modification and it is not necessary to use a third party service to help with one’. Remember, professional services do not actually perform Loan Modifications, they only put your information together and present it to the bank. Ultimately, the decision is made by your current lending institution. However, I would not suggest speaking with your bank until you have done some research on your own as the approval process does require some qualification.
With just a little bit of knowledge, some understand of what banks are looking for, and a few hours of time you can do a loan modification yourself. For the most part, there are three main considerations when preparing your own modification:
1) Writing a detailed hardship letter explaining to the bank the circumstances behind why you are requesting a modification.
2) Preparing a monthly financial budget outlining your incoming, expenses and how your money is appropriated each month.
3) Understanding the debt to income formula that the Banks use so that you can maximize your potential for qualifying for the lowest possible mortgage payment.
With a little help from a Do-It-Yourself Kit, you will be able to prepare a hardship letter, construct a qualified monthly budget, and most importantly understand the purpose of the Bank’s Debt-To-Income (DTI) Ratio. Once you understand the process and the requirements, you will be able to prepare a proposal for your lender that will not only increase your chances of getting an approval, but maximize your payment reduction at the same time.
- Don’t wait, take advantage of this incredible opportunity.