10 Steps to getting your DIY loan modification started
What is a mortgage loan modification protocol?
A mortgage “loan modification protocol” is simply the order or sequence of steps that a homeowner takes to accomplish a loan mod.
A loan modification is an arrangement in which the lender alters a distressed homeowner’s loan to reduce the monthly payments. Not all borrowers who are behind on their mortgages will be good candidates for loan modification. If you find your situation listed below, it might be appropriate to contact your lender about a loan modification:
* Loss of a Job
* Pay Cut
* Death of a Spouse
* Emergency Expense
* Injury or Disability
* Job Transfer
* Rate/Payment Adjustment that Raised the Payment Unexpectedly High
* You Owe More than Your House is Worth
* Military Duty
* Business Failed
* Damage to Property
You could be on hold for an hour or longer before you reach someone who can speak with you about your loan. If you don’t have what the lender needs, you will have to hang up and call back later. How frustrating. Therefore, be well prepared, so your long wait will not be wasted time. The lender will require that you fax certain written information to them in order to submit your modification request.
Here is your to-do list.
Mortgage Loan modification Protocol steps to do BEFORE you contact your Lender
Step 1 of the mortgage loan modification protocol…
1. Prepare a financial statement. A financial statement is actually your budget. If you don’t already have your budget written out, look over your checkbook or bank statements for the past three months or so. List every regular expense: mortgage payment, utilities, clothing, groceries, credit card payments, car payments, insurance, gas, bus fare, prescription/medical costs. Some of your expenses may have to be averaged—that’s OK. If there are bills that you have not been able to pay for a while, list them as well. It’s best to tally your expenses on a spreadsheet, but it’s not required. Don’t be surprised if your monthly expenses add up to more than your monthly income. After all, the purpose of the financial statement is to illustrate that you are experiencing financial hardship.
Step 2 of the mortgage loan modification protocol…
2. Find out the value of your home. To determine your home’s value, you must know the recent sales prices of homes that are comparable to yours. There are internet sites that aid you in finding your home’s value. If the web-sites don’t help, you may have to go to the court house to get this info. But if you know someone in real estate, it will be easy for them to do a Comparative Market Analysis for you. A Comparative Market Analysis, or CMA, is a report that shows recent sales of comparable homes in your area. CMA’s are free.