One of the reasons a loan modification attorney is so important to the loan modification process is that there are a million details and subtle nuances involved throughout the process. For example, successfully filling out the loan modification application requires a great deal of understanding. Trying to fill out your loan modification application on your own can be even more complicated than filling out your taxes.
Here are some important tips and bits of information that will be helpful in filling out your loan modification application.
Debt Ratio – Borrowers often have their loan modification application rejected because of their debt ratio. Debt ratio is one of the key factors lenders will use when deciding whether or not a borrower is right for a loan modification. However, most homeowners really do not understand what their debt ratio is or how to figure it out in order to qualify for a loan modification. A debt ratio is the percentage figure that represents how much of your gross income is spent each month on your housing expenses. Housing expense is the total of your mortgage loan and interest payment, your property taxes, insurance and home owner’s association dues (if applicable).
For your loan modification application to be accepted by your lender, your debt ratio must be at an acceptable percentage. Most banks, mortgage companies and other lenders require an absolute maximum of 45% debt to income ratio. If your loan modification application has a higher ratio, then the likelihood of being rejected is very high. The lender is looking to see you can prove your ability to afford the new house payment, both now and in the future.
Even the federal loan modification plan, called the Home Affordable Modification, has a debt ratio guideline; the government is targeted at 31%. If you take your total monthly household income (which includes the income from both spouses) and multiply that by 31%, that is your target payment.
Most likely, if you are having a difficult time making your current payments you have a debt ratio higher than 45%.
Besides your debt ratio, there are many other aspects of a California loan modification application which require a great deal of attention. For example, your hardship letter, your financial history and other information must all be accurate and build an effective case on your behalf. For these reasons, a California loan modification attorney is a must when trying to procure a California loan modification.
Figuring out your debt ratio can be confusing, gathering your information can be difficult, contacting the lender can be time consuming and a whole host of other problems can arise when trying to get a loan modification. A California loan modification attorney can help you from beginning to end, giving you the best chance to get your California loan modification approved.
A California loan modification attorney will work with you to put your application together, contact your lender, negotiate on your behalf and put you in the best position possible for a California loan modification.
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