Your Lake of the Ozarks Mortgage Lender: loan modifications

Monday, April 10, 2017

The 411 on Loan Modifications

During times of financial hardship, it can be difficult to make your monthly mortgage payments. One way to make your payments more affordable is through a loan modification. Today's blog from your favorite mortgage lender at the Lake of the Ozarks discusses loan modifications and some tips for getting one approved.

Loan Modifications

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.

Writing the Hardship Letter

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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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

Fax:(866) 397-0318

Email: mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

Wednesday, January 27, 2016

What is a Loan Modification?

Are you going through a financial hardship? Have you fallen behind on your mortgage payments? Are you facing a foreclosure on your home? A loan modification might be the solution to your mortgage problems. Your Lake of the Ozarks mortgage lender is here to help you understand what a loan modification is and can help you determine if you're eligible for one.

Loan Modification

A loan modification is an agreement between you and your mortgage company to change the original terms of your mortgage. This could be a change in the payment amount, length of the loan, interest rate, etc. In most cases, you can modify your loan so your monthly payments are more affordable. You might consider a loan modification if you're ineligible for a refinance, you're facing a long-term hardship, or you're several months behind on your mortgage.

Determining a Borrower's Eligibility

Lenders will use specific financial analysis criteria to determine if a borrower is eligible for a loan modification. This criteria includes:

Financial Hardship: The borrower experienced an unavoidable, verifiable loss of income or increase in living expenses. This could include job loss, death of a spouse or child, illness or disability.
Ability to Pay: The borrower can prove he/she will be able to make the new payments now and the original payment again after 6 months.
Debt-to-Income Ratio: While this may vary, most lenders require the borrower's debt-to-income ratio in the 36% to 45% range. Compensating factors such as credit score and the amount of equity in the property will also be considered.
Inability to Refinance: The borrower is unable to refinance, but still needs temporary lower payments to make it through financial hardship.
New Applicant: The mortgagor has not received a loan modification in the previous 24 month period.

Steps to Take

If you are interested in seeing if you qualify for a loan modification, follow these steps:

Gather Financial Information: Make sure you have your basic financial and loan information on hand before you call your lender. This information includes: your mortgage statements, monthly debt payment information such as student loans, car loans or credit card payments, and your income details proven through pay stubs and tax return documents.
Explain Your Situation: Be prepared to outline your current financial hardship and why you're having trouble making your monthly mortgage payments. You will also need to let the lender know if this is a short-term or long-term problem.
Once you have completed steps 1 and 2, you're ready to call your mortgage company at the Lake of the Ozarks to let them know you are interested in a loan modification and would like to see if you qualify.

Lakelender Michael Lasson is here to help with all your Lake of the Ozarks home financing needs. From new home loans to refinancing your home at the Lake of the Ozarks, I'm here to help you every step of the way. For information or questions you may have regarding mortgages, give us a call at 573-746-7211.