Mortgage After Loan Modification Lending Guidelines

This Article Is About Mortgage After Loan Modification Lending Guidelines

Home Buyers Can Now Qualify For A Home Loan After Loan Modification. Mortgage companies do not want to foreclose on homeowners who breach their home loans. Lenders want to do everything possible to have their borrowers keep their homes. They will try to do give borrowers options for a workout. Potential workout solutions include forbearance, a chance to sell the home, or a loan modification.

Lenders normally take a loss on the mortgage on loan modifications. A modification is a restructuring of the current loan resulting in a lower payment for the homeowner. The amount of arrears is either forgiven or added to the back of the loan balance. Each modification is different and tailored to each individual needs. A loan modification will be granted and approved by the lender if and only if the lender believes the homeowners will be able to afford the new payments after the modification. In this article, we will discuss and cover what a loan modification is and the modification process.

Reason And Benefits For Loan Modification

Loan Modification

The purpose of loan modification programs is to modify the existing mortgage loan a homeowner has to make the monthly mortgage payments affordable and avoid foreclosure. Loan modification can be done by restructuring the existing mortgage loan note. This can be done by decreasing the mortgage rates of the home loan and extending the term of the mortgage loan, thus, lowering the monthly payments.

As long as the borrower has current income and can afford a reduced monthly payment, loan modification is an ideal compromise between buyer and lender. Loan Modification the homeowner can still own their home avoid foreclosure proceedings. Loan modification programs are easier to get these days from lenders due to the mass foreclosure crisis since the real estate and credit collapse of 2008.

Benefits To Homeowners

A loan modification is a great way of getting out of default of your mortgage loan and avoid foreclosure. With a loan modification, the lender can reduce the current mortgage rate and extend the terms of a mortgage loan to make new modified mortgage monthly payments affordable where the borrower does not have to struggle every month. The lender will be reviewing financials and before they will approve a loan modification. The lender will make sure that the borrower will be able to afford it.

A Loan Modification is not the end of the world in being able to obtain another mortgage loan in the future. Homebuyers or homeowners can qualify for a mortgage after loan modification after passing the mandatory waiting period. To qualify for an FHA loan after a loan modification, the waiting period is one year after the loan modification to qualify. To qualify for a conventional mortgage after a loan modification, the waiting period can be up to 4 years to get a mortgage after a loan modification.

Am I Eligible For A Loan Modification?

Eligible For A Loan Modification

There are two different types of loan modification programs.

  • Government
  • Private

Most loan modification programs require that the homeowner prove financial hardship due to job transfer or underemployment which resulted in a drastic loss of household income which affects them in making their mortgage payment. They need to have a job and a consistent income source and provide W-2s, tax returns, and recent paycheck stubs. The mortgage lender will review income, assets, and liabilities and will offer the homeowner a revised monthly mortgage amount he or she is able to afford.

Beware Of Loan Modification Companies

You do not need a loan modification company to do a loan modification. Contact current mortgage lender and speak with someone from the workout or loan modification department. Whatever a loan modification company can do, a homeowner can do it themselves. Remember that lenders are not in the business of real estate investments. Lenders do not want the property and will do everything possible to help homeowners avoid foreclosure. Homeowners who are adamant about hiring a loan modification company, make sure they do not charge an upfront fee for services not yet performed. Be careful with loan modification companies that ask for an up front processing fee which is the same as an upfront fee.

It is illegal to charge a consumer an upfront fee for a loan modification, credit repair, or any type of mortgage/financial-related service. Ask for references and check out their references. Use the powerful tool of Google to see if they are reputable. Make sure that there is not any sort of investigation by a regulatory agency.

In the event homeowners get loan modification requests denied, there are other options available which include bankruptcy, deed in lieu of foreclosure, or short sale. A chapter 13 bankruptcy will allow homeowners to keep their homes. The trustee will do a workout repayment plan where homeowners get to keep home and avoid foreclosure. If there is a will, there is always a way so do not panic and take one step at a time.

How Can I Qualify For Mortgage After Modification

Qualify For Mortgage After Modification

Gustan Cho Associates is a mortgage company licensed in multiple with no lender overlays on government and conventional loans. Over 75% of our borrowers are folks who could not qualify at other lenders due to their overlays. Other borrowers at Gustan Cho Associates are folks who have recently gotten a mortgage loan denied by other lenders. Home Buyers who need to qualify for a mortgage after a loan modification, please contact us at GCA Mortgage at 262-716-8151 or text us for a faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, as well as holidays.

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