Tag Archives: Modification

Loan Modification -2 Mistakes To Avoid If You Want To Do It Yourself

The loan modification business is exploding. With interest rates at the lowest levels in history, many homeowners are taking advantage of the opportunity to negotiate a lower interest rate and better terms with their bank.

Doing a loan modification yourself is a much more economical, and many times a more effective option, than refinancing. For one thing, if you do it yourself it doesn’t cost anything (unlike a refinance -which can cost $ 1,000s). Therefore, the only risk is the investment of your time. The rewards can be great if the bank approves your modification. Many times you can achieve the same or better results than if you had refinanced. However, many loan modification applications are denied because of simple mistakes that were made during the application process. These mistakes can be very easily corrected.

Here are the 2 top mistakes to avoid when preparing your loan modification:

1-Poor hardship letter- Your bank will require you to construct a detailed letter explaining the circumstances leading up to your hardship. Although it might sound simple, one mistake here will get your modification denied immediately. Here is an example of what not to say, ‘I took out a loan to buy furniture, wallpaper, appliances, some landscaping and now the payments on that loan are making it difficult for me to keep up with my mortgage payments’. Now, I am not suggesting that you lie, but here is a better way to say the same thing. ‘I recently took out a loan to make necessary home improvements and I am now finding myself struggling to keep up with the payments’. You are just presenting the same thing, but differently. The conclusion here is that if your bank thinks in any way that you went on a spending spree, you have blown your one chance for an incredible rate.

2-Overstating your expenses- As part of the loan modification process, you will be required to complete a monthly financial budget. Many people instinctively think that the worse off you present yourself to the bank, the better your chances are for help. Be careful, as this is not true and can actually hurt you. In this situation, the bank will conclude that even a loan modification is not going to help and it will only delay the inevitable, a foreclosure. As a result, you will be denied. All banks use a formula to determine your income and expense ratio. You must fall within the proper range to qualify.

You only have one chance to get it right when speaking to your bank. You can’t go back and change the numbers or rewrite your letter. It is important to have a basic understanding of the process before you even begin to speak to anybody. A Do-It-Yourself guide will provide you with all the necessary information and help you through the process. Armed with these tools, you have the potential to significantly reduce your mortgage payments for good and get back on the right track.

J. Pisicchio is a mortgage professional with 20 yrs industry experience. Working at small banks & large institutions (Chase), he was formally trained as a credit analyst. His goal is to help consumers make the best financial decisions regarding their mortgage needs. For information on the Do It Yourself Modification guide, visit www.mortgageloanmodificationsecrets.com

Do it Yourself Loan Modification- With Assistance From a Guide

The laws and guidelines are changing to make loan modifications easier for homeowners. Not more than a year ago the word ‘modification’ sounded scary and complicated. Homeowners had only heard of these words from attorneys or loss mitigation companies. Although sometimes they can be helpful if your situation is complicated (or you don’t have a little time to invest), many times it’s simply not necessary to spend thousands hiring a professional. A little knowledge from a good Do It Yourself Guide is all you need.

As banks begin to change and adapt to the situation that homeowners are now facing, they are learning to embrace the concept (and willingness) of offering loan modifications to their customers. In fact, many Banks prefer you don’t use modification companies at all. Chase, one of the largest banks, is an example of this. When you call their main mortgage customer help number, they have an outgoing message ‘warning of the use of 3rd parties modification services’. The message goes on the say that they do not charge money to complete a modification and it is not necessary to use a third party service to help with one’. Remember, professional services do not actually perform Loan Modifications, they only put your information together and present it to the bank. Ultimately, the decision is made by your current lending institution. However, I would not suggest speaking with your bank until you have done some research on your own as the approval process does require some qualification.

With just a little bit of knowledge, some understand of what banks are looking for, and a few hours of time you can do a loan modification yourself. For the most part, there are three main considerations when preparing your own modification:

1) Writing a detailed hardship letter explaining to the bank the circumstances behind why you are requesting a modification.

2) Preparing a monthly financial budget outlining your incoming, expenses and how your money is appropriated each month.

3) Understanding the debt to income formula that the Banks use so that you can maximize your potential for qualifying for the lowest possible mortgage payment.

With a little help from a Do-It-Yourself Kit, you will be able to prepare a hardship letter, construct a qualified monthly budget, and most importantly understand the purpose of the Bank’s Debt-To-Income (DTI) Ratio. Once you understand the process and the requirements, you will be able to prepare a proposal for your lender that will not only increase your chances of getting an approval, but maximize your payment reduction at the same time.

It is not necessary to pay $ 1,000s to a company for something that can easily be completed on your own. With help from a step by step Do-It-Yourself Guide, it is VERY possible to reduce your mortgage payment by 30% or more—for Free! This is a once-in-a-lifetime opportunity as banks have never been as flexible as they are now. Don’t wait, take advantage of this incredible opportunity.

J. Pisicchio is a mortgage professional with 20 yrs industry experience. Working at small banks & large institutions (Chase), he was formally trained as a credit analyst. His goal is to help consumers make the best financial decisions regarding their mortgage needs. For information on the Do It Yourself Modification guide, visit www.mortgageloanmodificationsecrets.com