Interested in a Loan Modification? How to Get Started..
Many homeowners are evaluating whether or not they need a home loan modification. Some of these homowners are late on their mortgage, some are not late, and some are in foreclosure. Similar to refinancing when people wait until the rates are down and then people act, many homeowners wait until they know they absolutely need a home loan modification before they take any acttion.
While I applaud homeowners for taking action, don’t wait until the last minute. I know, easier said than done. However, if you are evaluating if you can afford your mortgage payment, then chances are you probably need to at least talk to a consultant to walk you through some steps to get started with the process.
From a homeowners perspective, what you can do is start gathering your income and asset documentation as well as writing down all of your monthly expenses. In order to begin negotiation with a bank, you will need to put together your 2 most recent paystubs, 2 months bank statements, and your most recent W-2 (2008 when you have it or 2007 if you don’t). If you are self-employed, you will also need a profit and loss statement outlining your income and expenses for at least the last 6 months.
The key to getting this paperwork together is that when you decide to pursue a loan modification, you will have your paperwork ready to get the process started right away. Too often I am talking to families interested in a loan modification and they are late on their mortgage or on the brink of missing a payment. Then I tell them they need to gather their income and asset documents to get started and it usually takes one to two weeks before I receive everything.
I know your busy and you have a lot of stress in your life due to your current circumstances. In order to minimize that stress even a little, start getting your documents together now so you won’s be rushed and adding another stress to your life when you decide to modify your loan and you have to get all the paperwork together.
As always, I’m here to help so if you have questions, feel free to ask..
January 17th, 2009 at 7:17 am
Hi,
Thanks for visiting my blog. I am reading about LM these days. If an existing homeowner tries to refinance but owes equal to or more than the house value then I’ve heard friends stating that the banks are not ready to talk.
This will be an increasing problem in 2009-11 with 5-1 ARM reset problems.
What solutions will banks/homeowners have for this?
1) Cant the bank lock the ARM rate for the duration of the loan to save the home?
2) Does it make sense for the homeowner to pay closing costs and difference between principal and 90% home value (97% in case of FHA)?
3)There used to be a law/condition whereby banks would refinance an existing loaner with new market rate but without re-appraising the house. I have heard that has died ?
What are your thoughts?
TD
March 1st, 2009 at 12:15 pm
I am presently refinancing our home….current mortgage is with a non conforming lender…..at a 20 yr 10.95% fixed!!!
It’s obvious why I need to refi….never missed a mortgage payment and have income to support refi at 6.25 with a conventional lender….
My plan is this:
1. Refi with conventional lender that is backed by Fannia Mae (current lender not backed by Fannie Mae and is a private bank and will not modify th mortgage to a lower rate.
@. After getting refi’d with new lender…my plan would be to avail myself of the Obama Modification process..
Do you think I can do this ? Are there closing costs to modify a mortgage with the Stimulus Plan modification program..
My closing cost to refi with the conventional lender will be $8000
We are sebnior citizens and need to lower our mortgage payments
Please RSVP
April 16th, 2009 at 2:35 am
Good article and I think the key with all things like this is not to leave it until the last minute. It is all too easy to stick your head in the sand thinking the problem will go away, when in fact it will only get worse if you do so - so take on this good advice I would say!