If you find yourself unable to make your mortgage payments, you may be eligible to apply for a mortgage modification. This can be a workable solution if you are unable to bring your account current. Federal government guidelines under the Home Affordable Modification Program say a mortgage is sustainable if payments are 31 percent of before-tax income. A mortgage modification can make your notes more affordable based upon your income.
Mortgage Modification
A mortgage modification is a permanent change in the terms of your mortgage loan. The lender can reinstate the loan under new terms, such as a lower interest rate or a longer time to pay it back. The mortgage company will sometimes forgive the amount you are behind or add these missed payments to the principle balance of the modified loan. These changes may help you to make your mortgage payments and avoid foreclosure.
Requesting Motgage Modification
Contact your mortgage company if you find you cannot make your payments or make up payments you have missed. Ask the lender if you might qualify for a mortgage modification. The lender will ask you for some basic information, including your loan number and details about your current financial situation. This will include your monthly income and expenses, proof of income, income tax returns, and a copy of your W-2 form. The mortgage company will send you an information packet to complete and return. Based upon the information you provide, the lender will determine if you qualify for a mortgage modification.
Home Affordable Modification Program
The federal government sponsors the Home Affordable Modification Program. To be eligible, you must occupy a single-family residence. You cannot apply for the program if you have a second mortgage on your home. You must not have had more than one previous mortgage modification. You must provide proof of financial hardship and proof of current income. Lenders can consider homeowners for the program even if they are in foreclosure. This will suspend foreclosure proceedings while the lender determines your eligibility for this program.
Mortgage Counseling Services
If you are unsure if mortgage modification is the right solution, consider using the services of a housing counselor. The counselor can represent you and approach the mortgage company for the best workout plan available. Some options the housing counselor may recommend include a mortgage modification, repayment plan or forbearance options. A counselor can also help you create a personal budget, which will help you avoid future situations making you unable to pay your mortgage.
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