Five Common Questions about Mortgage Modifications Answered

1. What is the first step in requesting a mortgage modification?

If you are seeking a mortgage modification, your first step is to send your lender a hardship letter. Your hardship letter should explain why you are seeking a mortgage modification along with the reasons why you can no longer afford your current payments. Whether it is because of a job loss, disability or some other reason, your lender will want to know your situation when considering your mortgage modification. Include your paystubs, bank statements and any other financial documents that will help your case in the hardship letter.

2. What should my debt-to-income ratio be in order to qualify for a mortgage modification?

The ideal debt-to-income ratio to qualify for a mortgage modification will be different among lenders. Most of them, however, would require a ratio under 45 percent. According to the governmentÆs plan for mortgage modifications, lenders must bring your payments down to 38 percent or less. Contact your lender to find out what they require in order for you to qualify for a mortgage modification.

3. I recently became unemployed. Can I qualify for a mortgage modification?

Unfortunately, you cannot qualify for a mortgage modification if you do not have a source of income. If your spouse still has their job, however, you may be in a better position to qualify for a modification.

4. How long will it take for me to get approved for a mortgage modification?

Typically, it takes between 30 and 90 days in order for a borrower to get approved for a mortgage modification. However, the time range depends on how fast your lender works to help you and the number of cases they are dealing with. These days, it may take a little longer with so many homeowners applying for modifications.

5. Should I let my mortgage payments go into default before applying for a mortgage modification?

Although many people in the industry will tell you to stop making payments before applying for a modification, lenders will typically work with you even if your mortgage is in good standing. According to the Home Affordable Mortgage Program, lenders are allowed to modify your mortgage loan even if your account is up to date but you are in danger of defaulting.

These are just a few questions many people are asking about mortgage modifications. Are you in danger of losing your home? Try negotiating with your lender before foreclosure. Many lenders are willing to work with their borrowers more than they ever have been.