Are you Eligible for A Mortgage Loan Modification?

It’s tough being a homeowner who needs mortgage help. There’s a lot of information out there about the government’s Home Affordable Modification Program (HAMP), which offers a loan modification option for struggling homeowners who are likely to lose their properties because they’re falling behind on their loan payments. But when you search the Internet for ways to get started, it can sometimes be so confusing, your feeling of helplessness grows even stronger.

When those feelings overcome you, stop and take a deep breath. Most things in life that are worth having don’t generally come easy. But help is out there if you know where to look.

Mortgage loan modification checklist

First, determine if you’re eligible.
   
1.  Your home must be your primary residence.

2.  You must owe less than $729,750 on your mortgage.

3.  You’ll be eligible for a mortgage loan modification if you’re struggling to pay your loan because of an increase in your mortgage rate, a job loss or income reduction, or unexpected medical expenses that are making it hard for you to pay your bills.

4.  You closed on your mortgage before January 2, 2009.

5.  Your mortgage payment, which can include interest, principal, taxes, insurance, and any homeowner’s dues, should be more than 31 percent of your gross income (that’s before withholding).

Mortgage loan modification application

There are two ways to begin the process. Call your lender, or 1-800-HOPE-NOW, where you can speak to a counselor from the Department of Housing and Urban Development (HUD).

At some point, you’ll be required to submit paperwork, so there’s no time like the present to gather the information to avoid delays.

First, fill out a Request Form. The questions are simple, and the information is the type that you have at your fingertips.

Next, fill out a Tax Authorization Form.  This gives the bank the authority to get a copy of your most recent tax return directly from the IRS.

You’ll also need to provide proof of your income. If you work for an employer, they’ll accept your two most recent pay stubs, as long as they show your year-to-date earnings. If you’re self-employed, you’ll need a recent quarterly or year-to-date profit/loss statement. If your income comes from government programs like Social Security, Unemployment, or Public Assistance, you’ll need a copy of the letter detailing the amount and frequency of your payments, and the two most recent bank statements showing receipt of these monies.

If you’re approved, you’ll begin with a trial period, which will include a lower monthly payment for three months. Once that’s completed, the lender can make the new payments permanent.

It will take time and effort on your part to make this happen, but most things in life that are worth having require some commitment. Saving your home is likely on top of that list.