A mortgage loan modification is an arrangement between the borrower and the lender that reduces the mortgage obligations during a time of financial hardship. The purpose of a loan modification is to make the payments easier for the borrower and avoid losing their home to foreclosure. Like the term implies, this arrangement is where the terms of the loan are modified or changed to make the loan more affordable. This could be reducing the mortgage rate or extending the loan term. In some cases, the lender may even write off some of the principal.
Getting a Loan Modification Approved
Approval for a loan modification can be difficult to obtain. When applying for a loan modification, the borrower must meet some qualifying criteria which includes: experiencing a documented hardship or change in financial circumstances, owning and occupying the property as a primary residence, having not filed for bankruptcy, not purposely defaulting to get a modification and being responsive in working with the lender. You must submit documents to prove the financial hardship. This includes paycheck stubs, a hardship letter, a budget and any other documents the loan servicer requests. Make sure you know exactly what is required of you. Misunderstandings about documents can cause complications in the approval process.
The hardship letter is very important and must provide a valid reason. Some of the most common reasons include payment shock, job loss, work cutbacks or pay reductions, underemployment, declining business or sales revenue, illness or injury, divorce or separation, disaster, incarceration or other legal issues. The letter itself should be simple, financially informative and based on facts. Be sure to clearly outline the financial burden you're trying to overcome. Then explain why a loan modification is the best solution.
If you're going through a hardship and struggling to make your mortgage payments, talk to your Lake of the Ozarks mortgage lender to see if a loan modification is a possibility for you. During these times, it's important to communicate with your mortgage lender. I'm here for you every step of the way!
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
Cell: (573) 216-7258
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.