Loan Modification Criteria - Top Questions & Answers

Confused about the loan modification criteria and how you can take advantage of the government stimulus programs offered to struggling homeowners? Well, the fact is that millions of borrowers may be qualified for some type of loan workout that will help them keep their home-how do you know if you may be eligible for one of these plans? Here is some information to get you started.


What are the basic requirements to get government assistance with an unaffordable mortgage? Well, the guidelines state that you must live in the home as your primary residence, your loan amount must be $729,750 or less, loan taken out before January 1, 2009 and you must be facing a financial hardship situation. What if I am unemployed-do I still qualify for a loan modification? Possibly-if you have 9 months of benefits left on your unemployment, then that will be counted as income. Also, the FED has expanded the HAMP criteria to allow temporary relief to unemployed homeowners by offering an extremely low mortgage payment for a pre-determined period of time. This is to allow you the chance to find a job and get back on track. What paperwork is required to apply? You will be asked to provide a detailed accounting of your monthly income and monthly expenses, as well as your banking information. This information will be reviewed to determine if you meet the loan modification criteria for approval. The government has mandated a formula to be used in this process. If you fit into that formula, you have a very good chance of approval. If you don't, then your chances are slim. So-learn the formula and use it to prepare your financial statement-it just makes sense! How long does it take to get an answer from my bank once I apply? Many homeowners have been frustrated with the long waiting times and lack of response from their banks-however many times this is caused by borrowers submitting incomplete or inaccurate application packages. Lenders are flooded with requests and those files that are incomplete are simply set aside or even discarded! So, you it is critical for you to understand how to prepare your loan modification application correctly and exactly what your bank needs to see in order to get a fast answer. The FED has said that once a participating bank receives a COMPLETE package, they now must respond with 30 days. What is I am turned down for a loan workout? Well, if you were turned down because you did not meet the loan modification criteria due to your financial statement, then you need to learn the formula and revise your budget. Again, if you fit into the formula you have a good chance. However, if you were turned down because home retention is just not a good option for you at this time, then you may consider a short sale instead. This is less damaging to your credit than a foreclosure. If you home is on the line, then you need to take a few hours to learn the loan modification criteria so that you know how to complete your application correctly. It is not hard to learn, and there are some helpful tools available to assist you. You may want to use a software program that actually mimics the federal criteria and does all the calculations for you automatically. This tool makes it much easier to prepare an accurate and acceptable financial statement and can save you hours of work and help you avoid mistakes.

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