What is a Home Loan Modification and Who Qualifies for it?
Are you having difficulties meeting your obligation under a Chicago home loan? If you are, then maybe you would like to know what a loan modification is.
Many borrowers who experience difficulties with their mortgage payments modify the terms of their Chicago home loans, to be able to make their payments on time. This modification can benefit the borrower greatly.
So, what is a loan modification?
Simply put, a loan modification is a plan agreed upon by the financially-challenged borrower and his lender regarding his monthly payments, and the rates and terms of his mortgage.
If the restructuring is successful, the borrower could reduce the monthly payment of his Chicago home loan to 31% of his income.
Knowing what is a loan modification and its goal can help you find a way to stabilize your shaky financial legs.
So, who qualifies for a loan modification?
The US Department of Treasury has stated that those who qualify for a loan modification are borrowers with high combined mortgage debt compared to income (38% or higher). Under the loan modification program, the government assures the lender (who has already agreed to lower the payment to 38%) that it will finance half of what it would cost the latter, to further bring down the payments to 31%.
This is all very good, however some people just don’t understand what a loan modification is and its real purpose.
Note, people who buy houses so they could sell it or speculators are not allowed to avail of the loan modification program. If you want to know whether or not you can qualify for a loan modification, get in touch with your lender institution and talk to them about your difficulties.
Be sure to give it some time, your lender would have to verify your story, especially the facts on your hardship letter. It would also be good advice to be absolutely honest when you write that letter.
Don’t be afraid that lenders will be hard on you, the fact is they like loan modifications, too. What is a loan modification to a lender, then? A lender looks at a loan modification as another way to earn some incentives.