Can Anyone Qualify for a Loan Modification?

by tammy on April 17, 2010

If you have found yourself in debt and unable to make your mortgage payments, you may be wondering what it takes to qualify for a loan modification. In short, the answer is very little. All debtors really have to do is prove legitimate financial hardship that is keeping them from paying their bills and prove that they can pay off the loan so long as a loan modification agreement is reached. Though this may sound fairly simple, it can actually be a bit tricky if you don’t know what you are doing. This article will provide information about who can qualify for a loan modification and what must be done in order to prove that you qualify.

As stated above, users must be able to prove that they are financially unable to make their loan payments on time. The only way to be able to do this, of course, is to truly be unable to make one’s payments on time. If you have not budgeted your money and taken a close look at your income and expenses, then you do not know this for sure. You should cut any “extras,” out of your spending. This includes small things such as unnecessary cab rides of bus fares, cable television bills, internet bills (if not needed for work), and any other little extras. Once this has been done, if you are still unable to pay your bills, then loan modification may be the answer for you. In order to qualify, however, you must be able to show one instance or several instances that have led you to the state you are currently in. Valid reasons for falling into debt may include the loss of a job, having to pay unexpected expenses related to health or the death of a loved one, experiencing a big change, such as a divorce, in one’s life or lifestyle, or any combination of these or like incidents. You will need to gather documented proof of any events that you are claiming have made you unable to meet the terms of the loan, as well as detailed financial reports and income tax return forms. These will be scrutinized carefully, so you should never lie or exaggerate your circumstances.

You will also need to prove that you can meet the agreements of a loan modification. If you feel that you would be able to fit smaller payments into your budget, then you should show this in detail when writing your hardship letter or speaking to a loan modification agent. Be sure that you know the maximum amount that you can afford to pay and how often you can afford to pay it. If you plan on doing something, just as taking another job, to make payments on the new loan, then be sure that you are upfront about this. The best thing to do would be to procure the new job or the new source of income before speaking to a loan modification professional. Documenting any changes in income or having proof of soon to be changes in income can be extremely helpful in qualifying for a loan modification.

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