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Many homeowners are upside down in the mortgage. Not only are they paying more for a home than it’s worth, but they are also spending a huge percentage of their income just trying to come up with the money to pay the monthly mortgage. Many homeowners assume that the only way to get out of a situation like this is through a refinance of the mortgage but there is another solution – loan modification. Loan modification is the ability for homeowners to acquire a new mortgage loan without having to apply for completely new loan.
Just like refinancing there is a process that goes into determining if loan modifications right for you. Here’s a look at the loan modification process.
Bank and Financial Institute Research
Your bank or financial Institute will need to research what your housing ratio is. A housing ratio is how much you are spending on the mortgage payment and how much income you have left over. Most banks require that you have a 31% ratio in order to qualify for a loan modification.
A Hardship Letter
To receive a home modification loan you must present a letter stating your hardship. This letter outlines the hardships that you are facing, why you need a loan modification, and what makes you a good candidate for a loan modification. Essentially a hardship letter explains why you got into the mortgage situation you are in and what you plan to do to get out of this type of situation.
A loan modification can help you save hundreds of dollars and prevent your home from going into foreclosure.
