Loan Modification Qualifications
In order to determine if you qualify for mortgage loan modification lenders will be looking at several things:
(1) Your financial details such as your income, value of the home and how much equity you have in the property.
(2) Whether the home is your primary residence; lenders are less likely to make modifications to a mortgage loan on an investment property.
(3) Your proof of financial hardship such as, loss of a job, considerable amount of medical debt, a medical condition that limits the ability to bring in income or loss of spouse.
Mortgage loan modifications are a great resource for anyone facing financial hardships or foreclosure, but the process can be overwhelming. The Lee Law Firm has many years of experience helping homeowners like you find the financial relief you need and keep your house. We are dedicated to protecting all of our clients from foreclosure; at the end of the day nothing makes us happier than seeing you walk into your own home!
Lenders look at your financial details to determine if you fall within Federal Housing Authority (FHA) guidelines, which means that there are many specific criteria you must meet. The most important is your debt to income ratio (DTI).
There are two aspects of your DTI that lenders will calculate when considering your mortgage modification application. The front-end ratio covers your monthly house payment and related fees, such as property taxes and homeowner’s insurance. The back-end ratio is made up of all debt payments, such as house payment, car payment, credit cards and loans. The FHA guidelines recommend that the front-end ratio not exceed 29% of your gross monthly income and the back-end ratio not exceed 41%.
Some lenders require a more conservative approach than the guidelines recommended by the FHA. This approach calculates DTI using a person’s net pay instead of gross pay. This conservative approach is not used by all lenders, since it would disqualify many potential borrowers; but is a good rule to consider for borrowers looking to keep their mortgage loan financially manageable.
You can see how specific some of the qualifications can be; which is why we are in the business of helping hard working clients like you. If you are wondering whether you qualify for a loan modification, just ask us! Our attorneys are here to serve you by making this lengthy process as smooth and easy as possible!