Loan modifications continue to be an amazing option for distressed homeowners trying to avoid foreclosure. A loan modification might be the most important thing you do while saving your home, so it’s important to do it right! However, despite the number of qualified homeowners filing applications, countless mortgage loan modifications are denied because of the most common mistakes. Don’t risk being unable to pay your mortgage.
Loan Modification Blunders
When your mortgage becomes overbearing or you know you will soon be unable to pay it because of a layoff situation or something similar, a loan modification can help you prevent foreclosure. Avoid these costly mistakes to keep the home you’ve worked so hard to establish.
- Hardship letter mistakes. A hardship letter is one of the first impressions that lenders will get while reviewing your case. However, contrary to its name, a hardship letter should not detail the hardships of your life financially or personally. Rather, your letter should focus on why your lender will NEVER see another late payment from you if they modify your loan. Quickly outline your verifiable gross monthly income and a realistic estimate of what you can pay. Remember, over 53% of those who applied for a loan modification last year are back into default and cannot pay their mortgage this year. Your lender will be considering your hardship letter very closely.
- Failure to present or obtain all information. Obtain all related information concerning your income, bills, debts, credit, and anything that can help you fight for your loan modification case. The more hard facts you disclose, the more likely your lender is to modify mortgage payments. However, don’t fall into the temptation of withholding or even lying about financial problems. Lies during the loan modification application process are considered fraud.
- Don’t stop mortgage payments. Even though you’re hoping to get lower mortgage payments through loan modification, don’t stop making payments just because you’ve submitted an application. Aside from a hit on your credit score and falling behind on your payments, this doesn’t give a good impression to your lender who will ultimately determine whether or not the loan modification request passes.